The market for ready-to-drink (RTD) alcohol products continues to surge around the world, with IWSR predicting RTD category volumes across the top 10 markets to climb by 24% in volume over the next five years.
IWSR reports RTD volumes have been growing faster than any other major drinks category since 2018, and are expected to significantly outperform the wider beverage alcohol market over the next five years, increasing their market share to 8% by 2025 (from about 4% share in 2020) in top RTD markets.
IWSR forecasts an approximate +15% compound annual growth rate from 2020 to 2025 for RTDs across 10 focus markets, compared to about +1% CAGR for total beverage alcohol during that same period. The 10 focus markets – Australia, Brazil, Canada, China, Germany, Japan, Mexico, South Africa, UK, and US – represent more than 85% of all RTD volumes worldwide.
Australia is the third largest RTD market by volume globally, behind the United States and Japan. It’s also continuing to lead innovation in the category. The 2022 International Wine and Spirits Competition recently awarded its first-ever RTD Producer Trophy, with Aussie canned cocktail pioneer Curatif scoring the inaugural gong.
“RTDs are still growing at higher rates than spirits, wine, and beer, signalling a major shift in consumer interest in this category across all demographics,” said Brandy Rand, COO of the Americas at IWSR Drinks Market Analysis.
“But it’s important to note that RTDs aren’t only stealing share from beer, they’re also attracting spirits consumers in markets such as Australia and the UK, and cider drinkers in South Africa. We’re also seeing a significant premiumisation trend in RTDs as more and more new brands enter the space.”
Premium-priced RTDs have also risen fastest than any other segment over the past two years, albeit on a smaller volume base, with new products increasingly launching at higher prices, the IWSR said.
Hard seltzers the primary driver of volumes
IWSR projects that hard seltzers will account for half of all global RTD volumes by 2025 (up from 30% share in 2020), driven by consumer demand for flavourful drinks with “better-for-you” attributes.
Although much of this growth will continue to come from the US, hard seltzers are forecast to also grow rapidly in other markets such as Canada (+50% CAGR 2020-2025), the UK (+90%), China (+84%), and Australia (+24%). Across the 10 focus markets in the study, hard seltzers are expected to post total volume growth of +26% CAGR 2020-2025.
Hard seltzers have fast become the drink of choice for Australians, growing 85% year on year making them the fastest growing category within spirits
“Hard seltzer volumes outside the US are small, but awareness is also low. As that awareness grows, we’re seeing that people are increasingly willing to consider trying these products,” says Rand. “It’s important to remember that it took a few years for hard seltzers to catch on in America, and we’re still in early days in this category outside the US.”
Cocktails/long drinks drive non-hard seltzer RTD growth
The other dominant RTD sub-category is cocktails/long drinks which are especially popular in countries such as Australia, Germany, Canada, and Mexico.
The number one seltzer brand in Australia, recently combined the two booming trends with a new Smirnoff Seltzer cocktail range, featuring Spicy Margarita and Watermelon Margarita flavours. Spicy Margarita is fashioned in the Tommy’s Margarita style featuring Smirnoff vodka, zesty lime juice and margarita flavour, balanced with sweetness and a kick of chilli topped with sparkling water. Smirnoff Seltzer’s Watermelon Margarita offers a fruity twist with a mix of Smirnoff vodka, watermelon and subtle notes of zesty lime and margarita flavour, topped with sparkling water.
Bacardi is celebrating 24% growth in canned cocktails by expanding its flavour selection, launching two new RTDs: Bacardi Raspberry Mojito and Bacardi Piña Colada canned cocktails are hitting shelves across the country, joining the popular BACARDÍ Mojito in the range.
The category is projected to grow by almost +9% CAGR 2020-2025. Other rapidly growing RTD sub-categories include hard coffees, hard kombuchas, and hard teas (though from a smaller base).
ARIA No.1 and Grammy-Award winning trio RÜFÜS DU SOL joined with friends across the music and drinks industry to release a new hard kombucha brand – Mate Maker co – this week. The names behind the brand include ex-Diageo exec Justin Medcraft and former Four Pillars Gin staffer Tom Appleton.
“We felt there was a gap in the market for simple and delicious drinks made from real, organic ingredients without all the fake stuff,” said Medcraft.
“Drinks innovation is so important for our customers and with the rapid growth of seltzer these last two years we’re confident that Mate Maker Hard Kombucha delivers all of the same functional benefits with a liquid that tastes really great,” concluded co-founder Tom Appleton.
Pepsico is bullish about the future of hard tea. The drinks giant is teaming up with FIFCO USA to develop a Lipton-branded hard iced tea product, to be launched in 2023.
FIFCO CEO Piotr Jurjewicz said: “Our FIFCO USA product development team stayed true to Lipton’s high quality and great taste. And based on our consumer research, we expect a strong brand launch and great response from consumers.”