28 October 2022

RTDs may hike sales to USD 11.6 billion globally over next five years

USA | Analysts believe there will be no slow-down in the ready-to-drink (RTD) category. A new report from the IWSR, an analytics firm, forecasts that the category’s global value will increase by an additional USD 11.6 billion over the next five years. Value growth will outpace volume growth, the IWSR added.

The IWSR RTD Strategic Study, out in September, looked closely at the RTD category in ten key markets, which together make up more than 85 percent of all RTD volumes worldwide: Australia, Brazil, Canada, China, Germany, Japan, Mexico, South Africa, UK, and the United States.

Of these, the American market will see the largest volume and percentage growth, although this progress is expected to slow slightly as consumer enthusiasm for hard seltzers is beginning to cool. Today, hard seltzers constitute more than 60 percent of the American RTD category.

Hard seltzers overtaken by cocktails

The IWSR expects RTDs to grow by 24 percent globally over the next five years, as volumes of spirits-based RTDs will overtake hard seltzers by 2025. Eventually, cocktail products are forecasted to command 26 percent of the total category, compared to hard seltzer’s 20 percent.

The category’s growth is charged by consumers demanding more premium RTD products. This is largely driven by new entries of spirits-based offerings and well-known premium brand extensions, which are more appealing than run-of-the-mill hard seltzers.

In view of the deluge of flavoured vodkas a decade ago, it is not surprising that vodka options, in particular, are pushing innovation.

US market will lead the way

“Consumers in the US have grown accustomed to the convenience and variety offered by RTDs, which has increasingly led to people trading up to spirits-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.”

The good news is that there is no single dominant type of RTD globally, which allows alcohol firms to capitalise on local tastes and trends.

The sad news is that RTDs will continue to woo customers away from beer. In fact, consumers will pay double for the same size serving of an RTD.

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