Mixing It Up: Premium Cocktail Mixers Have Brands & Retailers Rethink the Category

Q Drinks founder Jordan Silbert has often said the inspiration for his mixer brand came from personal experience – If he was spending good money on premium spirits, why would he bury those flavors in low quality mixers?

Founded in 2006, Q is now one of the top two premium mixer brands in the market, alongside British import Fever-Tree, with both brands amounting to a combined 7-8% unit ounce share of the entire mixer category, according to Q. IRI reported retail dollar sales of Q’s liquid mixer line up 26.1% in the 52-weeks ending January 1, 2023 while its tonics and club sodas grew 3% to $15 million in the same period. In the same period, Fever-Tree rose 12.1% to over $46.6 million in retail sales.

Last June, Silbert moved into the chairman position at Q Drinks, handing the CEO role over to former Mondelez International SVP of sales Bob Arnold. Now, seven months into the role, Arnold believes the market for premium mixers is rapidly evolving – looking much more favorable to the category than it did even last summer – as the adult beverage sector undergoes its own transformation through the rise of non-alcoholic alternatives and RTD cocktails.

“You look at the premium segment, the premium segment is well positioned by 2025 to almost, I think, no longer be considered the premium segment, but rather, the mainstream,” Arnold said. “And the [current] mainstream becomes the value.”

Overall, IRI reported that liquid cocktail mixers up 0.8% in the period, as brands like Zing Zang reported modest 0.4% dollar sales growth and others such as Mr. & Mrs. T (-5.5%) and Tres Agaves (-5.7%) fell. However, tonics and club sodas have seen significant growth, up 14.3%, with private label drinks growing 6.6%. But the growth has primarily come from the premium players, as mainstream stalwarts like PepsiCo’s Schweppes (-6.2%) and KDP’s Canada Dry (-8.1%) have struggled to keep up with premium competition.

The premium segment has continued to perform, even in the face of some pandemic-related supply disruptions hitting Q and Fever-Tree last year (and which Arnold said is now in Q’s rearview). Last year, Fever-Tree unveiled a slate of lower-calorie innovations, including its new Blood Orange Ginger Beer and Lime & Yuzu flavors on its core sparkling mixer offerings, while also quietly acquiring U.S.-based Powell & Mahoney – which produces multiserve craft margarita, sour and bloody mary mixes – for $5.9 million.

The mixer category has also benefited from some new blood through startups like AVEC, Top Note Tonic, and the actress Blake Lively’s Betty Buzz entering the fray. Now, this wave of innovation – combined with the poor performance of many of the old mainstream brands – is leading some retailers to rethink the mixer shelf. Even in the short time since Arnold took over the day-to-day operations at Q, he said retail buyers who previously told him mixers were a low priority category are now coming to the company seeking “thought leadership” on how to grow the set.

“The conversation they’re starting to understand is, ‘Okay, I need to give more space to this premium segment, I need to shrink down the mainstream segment, and we now have two new anchor brands in the retail space that we need to be leaning in on,’” Arnold said. “So it’s pretty extraordinary that’s happened – forget about years, within months.”

According to Josh Miller, founder of craft mixers startup Owen’s, the ability for premium and small brands to swiftly innovate has been a key advantage over mainstream brands. Last year, the brand – which is currently in over 23,000 retail doors nationwide and more than 10,000 on-premise accounts – introduced a nitro-infused espresso martini mix containing 50 calories and 2 grams of sugar per can. Miller noted that the use of nitro, along with the better-for-you label, has helped attract new and younger consumers to the brand.

“What’s really driving this category is bringing new consumers into it,” he said. “We don’t just go after your stereotypical cocktail crowd of 41 to 60 years old at home, we try to skew younger, older, middle aged so there’s a product for everybody. And we found the espresso martini brought in this new generation of drinkers.”

A Dry Mix

The pandemic helped to charge up the premium mixer segment after consumers began paying more attention to the alcoholic beverages they were preparing at home. The growth of premium spirits – which has remained resilient despite the looming threat of a recession – has also been a source for the expansion of the premium mixer segment, and the market for adult beverages is also rapidly diversifying. The Dry January and sober curious trends have led to the rise of the alcohol alternative category, which has created an influx of NA spirits, wines, beers and mocktails seizing shelf space.

According to research company CivicScience, a survey of nearly 3,000 U.S. consumers who drink alcohol found 41% were somewhat to very likely to participate in Dry January, down slightly from 43% last year but still elevated from just 33% in 2021. Gen Z consumers were most likely to take a month off of hard drinking, as 55% of consumers aged 21-24 said they would participate, while older millennials and Gen X (ages 35-54) were the least likely to join in at just 38%.

At Fever-Tree, which has more than doubled its business since the pandemic began, CEO Charles Gibb said the brand has been quick to partner with NA spirits producers like Seedlip and Lyre’s to cross-promote, including digital campaigns advertising both brands and in-store activations and sales, encouraging consumers to buy both companies’ products together. However, Gibb said he believes that Dry January is just one branch of the larger better-for-you macro trend, providing Fever-Tree an opportunity to establish itself as not only a better quality, but also a healthier way to drink. The brand’s low calorie Blood Orange Ginger Beer SKU became its all-time fastest growing new product launch, he said, and additional innovations will lean into the better-for-you positioning.

“The bit that excites me frankly is – yes, continued growth in tonic, yes, continued growth in ginger beer – but this area of low calorie drinking, which really fits into Dry January,” Gibb said. “Because Dry January, when you really want to talk about it, is a concept around being healthy.”

Dwight Richmond, director of center store at Seattle-area natural retailer Town & Country, said the overall mixer category has struggled for years and was upheld primarily by Bloody Mary and Margarita mixes, as consumers paid more attention to ingredient labels and sugar content and the old mainstream mixers fell out of favor. But even attempts by mainstream brands to introduce premium lines (such as Schweppes and Canada Dry have introduced) has been “too little, too late,” he said.

“[Mixers is] not a category where we’re going to say, ‘Okay, well, we’re going to abandon it and get rid of it completely,’” Richmond said. “But in larger sets and larger stores, yeah, we might pull it out for some more NA space because NA is where the massive growth is coming from right now – and ready-to-drink cocktails.”

Town & Country became one of the first U.S. retailers to introduce a dedicated alcohol alternatives set last spring and has seen the strength of the NA boom, Richmond said, as sales are potentially on pace to surpass $1 million across six stores in its first year since building out a dedicated shelf.

But Richmond noted that “new guard” brands like Betty Buzz are “making up the losses in the gaps of the category overall,” as the startup makes an aggressive marketing push to grow awareness. This has led Town & Country to readjust its approach to the mixer set, “stripping out some of the old guard” in order to provide a fresh arrangement with better-for-you and higher quality brands. And if the retailer does decide to expand its NA set at the expense of mixers, it’s less likely to come out of the premium brands’ space.

At California-based retail chain Erewhon, purchasing director Ana Yoo said brands like Betty Buzz are doing well, but the trendsetting grocer’s customers are mostly gravitating towards functional NA brands and mocktails like De Soi, HiYo and Kin Euphorics, which can be consumed as a standalone mocktail, or used as a mixer with spirits.

While alcohol alternatives are certainly impacting the mixer set, less clear is the role RTD cocktails could play in the category’s future. While canned cocktails may appear to remove the need for a mixer, Richmond said he’s mainly seen the category draw the most sales away from wine, while Arnold and Gibb said their data shows it drawing sales from craft beers. Gibb suggested that canned cocktails may even be complementary to premium mixers by introducing more consumers to upscale alcohol consumption.

Meanwhile, a different opportunity may emerge for smaller mixer brands as alcohol manufacturers seek partners to launch RTD cocktails with; Miller said that Owen’s has fielded numerous calls from large alcohol conglomerates interested in working with the brand on co-developing an RTD, although he hasn’t taken any up on the offer yet.