Ready-to-drink (RTD) products surpassed $13 billion in off-premise sales in the 52-week period ending July 13, up +4% year-over-year (YoY), according to a mid-year report from market research firm NIQ.
The report unpacks the growth of the fourth category, which now represents 12% share of bev-alc dollars. In dollar value off-premise, the segment now stacks up second behind imported beer ($13.8 billion).
Here’s how the sub-segments break down in sales and dollar sales changes compared to a year ago:
- FMBs: $5.4 billion, +9.9%
- Hard Seltzers: $3.7 billion, -13.1%
- Spirits-based RTDs: $2.5 billion, up +22.5%
- Wine-based RTDs: $1.2 billion, +11%
In terms of format, cans make up 81.3% of dollar share, up +5.2% YoY. While cans in 12-pack format account for the largest share of multipacks (33.6%), growth has dipped -3.1%. Six-packs are also down -0.2%.
On the other hand, the single-serve can is up +12.2% and accounts for 27.8% of dollar share. The 8-pack also continues to pick up steam representing 6.1% of dollar share and rising +34.4%. The 24-pack is also showing double-digit growth (+26.8%).
Bottles make up 15.9% of dollar share but are falling in sales, down -4.6%. The pouch format has also dipped -10.1%.
As for segments, spirits-based RTDs continue to gain share at hard seltzer’s expense, now holding 20.1% share, up +22.5% since the period last year.
Meanwhile FMBs (41.7% of share, up +10.3%) have surpassed hard seltzer’s share (28.8%, -13.2%). Wine RTDs represent a 9.5% share, up +11%.
As for innovation: almost half of RTD launches are spirits-based, but malt-based RTDs are the biggest contributor to innovation dollars (68%).
Across all RTD subsegments, spirits-based seltzers lead in sales growth (+29.9%), followed by hard tea (+27.6%), hard soda (+25.4%), spirits RTD cocktails (+18.1%), canned wine (+12.7%) and all other FMBs (+6.3%). Meanwhile the following subsegments continue to decline:
- Wine seltzers, -76.4%
- Hard Coffee, -43.7%
- Wine spritzers, -30.7%
- Spirits ranch water, -23.2%
- Hard kombucha, -14.8%
- Malt seltzers, -13.2%
- Hard lemonade, -6.5%
The top trending attributes posting large growth rates in comparison to total RTDs include labels that state they are: free from artificial colors, fit in the 1-50 calorie range per serving, Tetra Pak-certified, and eco friendly.
When shopping for RTDs, shoppers are more likely to make decisions at the shelf and be influenced by fragmented distribution, in comparison to beer, wine and spirits, NIQ reported.
Spirits, Vodka Winning On-Premise
The report also provides a glimpse of how RTDs are performing in on-premise retailers: 17% of on-premise consumers drink RTDs away from their homes. Pre-mixed cocktails are the top choice of consumers surveyed (54%), followed by a spirit with a mixer (45%) and single-serve wine in a can or a bottle (45%). Vodka wins as the most popular spirit base (71%), followed by tequila (54%) and whiskey (48%).
The most important factors when choosing an RTD brand (in order of importance) are the quality of the product, the range of flavor, and the alcoholic base, followed by the reputation of the brand. Calorie count, plus social media presence and advertising were the least compelling reasons to select a brand.
As for demographics, RTD drinkers are young and are more active visitors to restaurants and bars than the average consumer. Ages 21-34 lead as RTD drinkers on-premise. Those restaurant and bar RTD drinkers also lean slightly more male.
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As RTDs replace existing mega category products, analysts argue we are likely to see an “ongoing movement towards reduced consumption but higher quality brands.” Extended loyalty may be harder to come by as shoppers seek products that match their usage occasions and taste preferences.
Over the past year, UPC counts have stabilized indicating that the category is maturing. Overall innovation launches are on a slight decline, but there are 7,500 RTD items available, which means that SKU rationalization is likely.
What will consumers be looking for in the future from RTDs? Many consumers are less concerned about the alcohol base of RTDs and are instead drawn to flavors, cocktail varieties, and the convenience of consumption, according to the report.