There’s an RTD revolution sweeping Australia and its growth has been accelerated by COVID-19. Over the past five years, the industry has slowly fought back from heavy tax burdens by focusing on innovation to engage consumers. Its determination has finally paid off, with $1billion category booming again according to Liquor Marketing Group (LMG).
The Australian membership-owned retailer has revealed market-leading growth for the RTD category, with dollar sales up +40.2% over the 12 months to March 2021 compared to the previous year.
Across LMG’s 1400+ stores, with retail banners including Bottlemart, SipnSave, Harry Brown, and Thirsty Camel in Western Australia, the strong growth trajectory for RTDs has continued in recent months with sales up +39.3% for the quarter
ending March 2021 versus a year ago.
LMG’s National Merchandise Manager for Beer, Spirits and RTDs, Scot Hayman, said: “While RTDs have witnessed an extraordinary resurgence across the industry over the past year, LMG’s dollar sales growth for the category has continued to be higher than the total market average, and this trend has been consistent in each state and for all RTD segments.
“What we have witnessed with RTDs is a layered effect, driving growth. Pre-COVID, the RTD category was still growing predominately driven by NPD and the emergence of various ‘better for you’ options, in particular, no-sugar variants. When COVID hit, these underlying growth factors accelerated, as more shoppers bought into RTDs because they saw them as a perfect convenient solution for the increased number of at-home consumption occasions.
“Interestingly, we’ve found that an increasing number of male shoppers have been rediscovering and engaging with the RTD category, particularly with vodka and bourbon.”
Across the states, RTDs performed the strongest for LMG in WA with sales up +55.2% for the 12 months ending March 2021, followed by NSW (+44.7%), QLD (+38.3%), VIC (+33.5%) and SA (+34.0%).
All RTD segments have recorded significant growth the in the last 12 months to March 2021, with the strongest growth drivers being vodka (+72.3%), bourbon (+32.6%), and newcomer, seltzer, which LMG said “continues to post impressive results as more and more consumers discover innovations in this segment”.
LMG’s strong results for the RTD category have been driven by both an increase in customers (+29.3%) and an increase in customer spend per transaction (+12.1%).
Hayman said: “Over the past couple of years, LMG has been feeding the growing consumer demand for beverages for a balanced lifestyle. RTDs with low and zero sugar, light RTDs – particularly in vodka and gin, and seltzer align with this trend and have given shoppers a reason to rediscover and re-engage with RTDs, while simultaneously attracting new buyers across different demographics and life stages.
“Compelling, exclusive activations, and pack formats to suit different shopper occasions are key drivers of traffic to our stores. A good example of this was our limited-edition Vodka Cruiser Blueberry and Pom Pom flavours over Christmas, while our exclusive 10-packs across various brands are a strong contributor to LMG’s overall RTD growth.”
The global RTD revolution
The trend has also driven huge growth for suppliers in Australia. This week, Campari Group reported organic sales were up 22.6%, driven by the double-digit growth of brands such as Wild Turkey RTDs.
Last month, Brown-Forman reported Jack Daniel’s RTD sales were up 34% in Australia; while in January, Diageo said it’s Australian RTD sales in the six months to December 31, 2020 grew 30%, with Bundaberg Smirnoff Spiked Seltzers and Gordon’s Pink Gin among the big performers.
The rest of the world took a while to catch on to the appeal of RTDs, but canned cocktails are now the fastest-growing alcohol beverage category in the US market, according to the IWSR.
Innovation has become a key concern as brands aim to stand out from the competition and meet evolving consumer needs.
IWSR notes: “RTD innovation has been driven by consumer-centric, as opposed to product-centric, trends, allowing the category to expand its appeal and gain a robust relevance in a variety of consumption occasions. Principally, brands have capitalised on the health and wellness movement by creating iterations that are low in sugar and alcohol, and contain natural or organic ingredients.”
Brandy Rand, COO Americas at IWSR, said: “Winners will differentiate their proposition to consumers in order to stand out among the masses,” says Rand. “Premiumisation through alcohol base, unique flavours, functional benefits and purpose marketing strategies are among the angles that could yield greater consumer appeal and demand.”
Vice President of global marketing for Bombay Sapphire, Natasha Curtin, agrees. She told Forbes: “There has been a stigma that canned cocktails are low-grade or party drinks but in recent months, the RTD category has completely turned the old stereotypes on its head and has become one of the top growth sectors in the alcohol industry.
“Premium brands are setting the benchmark and enhancing the category by providing drinkers with a quality cocktail experience in a convenient format.”