RTD Growth Isn't Slowing Down, But It's Changing

The ready-to-drink (RTD) market shows no signs of slowing down, and value is becoming the key to that growth.

According to a longitudinal annual study from IWSR Drinks Market Analysis, the global leader in beverage alcohol data and analysis, consumer demand for premium RTD products will drive the category forward, with value growth outpacing volume growth at 8% vs 5% CAGR 2022–26.

The 2022 IWSR RTD Strategic Study examines and forecasts growth in the RTD category across 10 focus markets – Australia, Brazil, Canada, China, Germany, Japan, Mexico, South Africa, UK, and US – which cumulatively represent more than 85% of all RTD volumes worldwide. Overall, RTD category volumes across the 10 focus markets will grow by 24% over the next five years.

The US continues to command the largest volumes and percentage growth, though this is expected to temper, as momentum for hard seltzers (which make up 60% of the RTD segment in the US) has begun to cool in the market.

Part of the reason for this slowdown is the rise in premiumization. Premium-priced RTDs have grown faster than any other segment over the past two years, albeit on a smaller volume base, with new products increasingly launching at higher prices. This is driven by an increase in spirit-based offerings, higher ABVs, and well-known premium brand extensions.

In fact, across all markets, more than 50% of consumers are influenced to purchase RTDs made by a well-known spirits, beer, or soft drink brand. RTDs produced by a local craft brewery or distillery also rate highly, whereas celebrity-backed brands rank lowest in terms of influence.

“Consumers in the US have grown accustomed to the convenience and variety offered by RTDs, which has increasingly led to people trading up to spirit-based cocktails. This reflects the overall spirits premiumization trend in the US and the popularity of bar-made cocktails,” says Brandy Rand, chief strategy officer at IWSR Drinks Market Analysis. “As a result, hard seltzer volume is now projected to decrease after hitting all-time highs, which will lead to more moderate growth levels across the total RTD category.”

IWSR defines seven sub-categories of RTD products:

  • Hard seltzers
  • Hard coffees
  • Hard teas
  • Hard kombuchas
  • Wine spritzes/coolers
  • Flavored alcoholic beverages (FABs) (including the likes of Smirnoff Ice)
  • Cocktails/long drinks

It's this last category where the greatest innovation and growth is being seen. Cocktails/long drinks reflect well-known cocktails as well as common mixed drinks containing a base spirit and a non-alcoholic mixer, where the base alcohol is clearly identified.

According to IWSR, cocktails/long drinks are forecasted to spur the most growth in RTDs globally, with volumes expected to overtake hard seltzers in 2025. In the 10 focus markets, cocktails/long drinks are forecasted to command about 26% of the total RTD category by 2026, compared to 20% for hard seltzers.

IWSR’s study shows consumers are continuing to drink RTDs both instead of and alongside traditional alcohol categories. Beer is cited as the most commonly replaced drink, as well as the drink most likely to be consumed with RTDs in the same occasion. RTDs are a clear trade-up from beer, with consumers paying roughly double for the same size serve of an RTD.

Taste is also a leading factor in why consumers are choosing RTDs, and IWSR’s innovation tracking shows an increase in full-flavored products across all sub-categories.

“With the RTD category firmly established and competition at an all-time high, brand owners continue to focus on innovative products and brand extensions or partnerships to drive greater awareness and distribution. The RTD innovation IWSR is tracking year-on-year clearly shows a rapid pace of product transformation to meet consumer demand,” says Rand. “There is no single dominant type of RTD globally, which makes the category uniquely positioned to capitalize on local tastes and trends.”


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