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Could RTDs be the next big thing in bars?

It took the rest of the world a long time to learn what Australia has known all along: RTDs are a winner when it comes to convenience in a can. And they’re predicted to be the saviour of the on-premise in the US.

Brandy Rand, chief operating officer of the Americas at IWSR Drinks Market Analysis, told CNBC that she’s expecting more RTDs to show up on bar menus as businesses adapt to COVID-19.

“Consumers like them and they also provide on-premise operators a profitable option when faced with capacity and staffing issues, tighter margins, and slimmer menus,” Rand said. “Canned cocktails are also a great option for drinks-to-go in states where legal.”

According to IWSR, the premix cocktail category grew by 50% in the United States between 2019 and 2020. While the segment is still relatively small, accounting for only 3% of US spirits volume, experts expect huge growth after its uptake during the pandemic.

Bank of America Securities is forecasting that the category will reach $3 billion to $4 billion in revenue over the next few years. In a March report to its clients, the bank’s beverage analysts predicted AB InBev and Diageo were the two companies that will emerge as key players.

AB InBev entered the segment in the US in 2019 through its purchase of craft distillery Cutwater, which has the second-bestselling canned cocktail brand in dollar sales with a 10% share of the RTD space, based on IRI data from the 13 weeks ended May 9.

Fabricio Zonzini, president of the company’s beyond beer unit, told CNBC his division’s first priority is RTD beverages.

“I think that COVID was somewhat a propeller for ready to drink because it brought the convenience of the bar to your home,” he said. “And we saw that growth. Thank God we had Cutwater.”

Meanwhile Diageo is seeing success with Crown Royal, Ketel One Botanical and Tanqueray canned cocktails in the US.

Will Aussies embrace canned cocktails at their local?

As for the outlook in Australia, it remains to be seen if ordering a cocktail in a can will become the norm at pubs and bar.

Diageo Australia MD Angus McPherson told Food Mag earlier this year: “During COVID-19, RTDs had a little bit of a resurgence mainly because the on-premise was shut and consumers were instead having a cocktail at home. A premix/RTD was a simple way for them to continue enjoying that experience.”

When bars aren’t in lockown, it’s hard to replace the magic that happens at the hands of a talented mixologist, but there are signs the two can co-exist, especially with the current shortage of hospitality workers.

Mark Collins, co-founder of Basic Babe, which recently released a range called Cocktails by Basic Babe says RTDs and canned cocktails “absolutely have a place within the on-premise”.

“Where we see them working and are having success with Cocktails By Basic Babe is in venues that are high foot traffic,” he explained. “Our sparkling canned cocktails help venues decrease the wait time for consumers while still delivering a quality drinking experience. We have also had very solid interest from the on-premise for our new BOXTAILS two litre bag in box concept. Venues are excited to serve them as a sharing cocktail option.” 

Cocktails on tap have already been gaining ground over the past few years in high-traffic venues. Among the strong performers are Beam Suntory’s Canadian Club & Dry, while Pernod Ricard has seen success with its Kahlua Espresso Martini offering.

Even the hottest bars are jumping on the trend. For example, Maybe Sammy’s new Sydney CBD cafe and bar, Sammy Junior, has four cocktails available on tap.

Sydney’s uber cool Continental Deli was making canned cocktails long before the pandemic and now serves them both in house and to take home. Many of the country’s best bars and distilleries have also been producing bottled cocktails for takeaway since March last year.

Brands are also creating premium offerings that are among the world’s best premixes and scored a swag of medals at the 2021 World Premix Awards.

Premium canned cocktails brand Curatif was the frontrunner at the competition, with six medals, including two World’s Best Awards. The Melbourne based start-up took out the top gong in the Classic and Contemporary cocktail award categories, winning the World’s Best Classic Cocktail for its Tequila Tromba Margarita and World’s Best Contemporary Cocktail for its Black Pearl Toreador, which was created in collaboration with Melbourne’s famed Black Pearl bar.

However, when it comes to RTDs such as bourbon and cola, while they are hugely popular in the off-premise, they’ve not been a big trend in the on-premise to date, other than for events such as festivals. Punters who order a bundy and coke expect it to be mixed at the bar rather than offered to them in a can.

Will that change as the convenience trend continues to gather pace? Watch this space …

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