Beam Suntory bets big on bottled RTDs

Beam Suntory is aiming to “elevate” the bottled ready-to-drink (RTD) segment and sees an opportunity to expand in the travel and leisure sectors, the firm’s managing director for RTDs said.

Beam Suntory’s bottled cocktail brand On The Rocks (OTR) surpassed 600,000 nine-litre cases this year, according to Heather Boyd, who joined Beam Suntory as managing director for its RTD business in the US in January 2021.

The ex-Diageo executive said the US-based brand, which was acquired by Beam Suntory in September 2020, was “born out of travel and leisure, and the hospitality industry” and “built in partnership with airlines”.

Boyd noted that OTR is gaining consumers in the travel and leisure space where consumers are trying it there and then “looking for the brand back at home”.

The brand is predominantly available in the US and Canada, with partners including the Marriott hotel chain and Southwest Airlines, which offers the brand’s bottled Margarita.

Boyd believes “there’s a real opportunity for us to continue to expand our travel and leisure presence”.

“The interesting thing with hotels is that we’re not calling on the back bar,” she explained. “We’re calling on catering, we’re served by the pool, we’re served in the spa, we’re served as part of room service on the menus there.

“So you can get a lovely cocktail with your dinner when you order from your room. So these are the places where we’re on the late-night menus, where a bartender or bar staff may be going home.”

‘Clear leader’ 

Boyd said OTR “opened up the premium-plus bottled segment” and is growing at a double-digit rate.

She added: “OTR is the clear leader in premium-plus cocktail bottles and the segment grew by 47% in the year to date [in the US], which is 19 times faster than the spirits category. The velocity of the segment is two times faster than the prepared cocktail category.”

The RTD sector and premium-plus bottled cocktail segment are “on fire, particularly in the spirits-based RTD space”, she added.

In the past year, the brand has expanded beyond its core range to offer seasonal limited edition products twice a year. In 2023 this included the launch of a Midori Sour (20% ABV) in March – an “iconic 80s cocktail”, said Boyd – and the most recent SKU, White Negroni (made with Beam Suntory’s Sipsmith gin). The latter taps into the “winter holiday season” as a “lighter” twist on the classic Negroni, she added.

Boyd said the limited offerings “capitalise on the trends that we’re seeing in the category” and allow consumers to try something new.

OTR is also set to launch a Blue Hawaiian RTD next year, a tropical serve made with Beam Suntory’s Cruzan rum, alongside coconut and pineapple. “It’s the perfect companion to your beachside getaway or your backyard barbecue under the sun,” Boyd explained.

She also noted that the company is in the long game when it comes to the RTD business.

“Beam Suntory is a company that really believes in the future of the RTD segment and its longevity,” she said. “We are investing quite a bit of resources and into not only the business today, but also into the pipeline for the future. And one of the things that’s really important to us, is to grow the pie and the category, and to bring retail sales value not only for us, but for our distributors as well as our retailers. As part of that we are building our portfolio.

“And one of the things that you see is bringing premium cocktail experiences into the segment, but also a dynamic and interesting drink experience that can take the category into the future, and bring something that’s really differentiated into the marketplace.” 

Partnership with J-Lo

To complement the group’s RTD portfolio, Beam Suntory took a minority stake in DeLola, a premium spirits-based bottled cocktail brand launched by singer Jennifer Lopez in March 2023.

Beam Suntory is also the global distribution partner for the brand, which currently offers three Spritz serves (between 10.5-11.5% ABV and 110 calories or fewer each).

Lopez began developing DeLola in 2020 in collaboration with Teremana Tequila co-founders Ken Austin and Jenna Fagnan, her manager Benny Medina, and mixologist Lynnette Marrero.

Boyd said Beam Suntory was approached by Austin and Fagnan with an opportunity to invest in a brand with a female Latina behind it.

“Jennifer realised there was a gap in the category for her,” Boyd explained. “And she really liked cocktails, but found a lot of the products were loaded with sugar and weren’t things that she was able to incorporate into her lifestyle.

“Jennifer played a hands-on role, she built the name, the packaging, developed the liquid and decided what the line-up was going to be.”

Beam Suntory also played a part in the development of the product, Boyd confirmed.

The company will also expand distribution of Suntory’s Japanese RTD brand -196 in the US. “This past year we launched it in four markets, and we’ll be expanding it to 15 markets in 2024,” Boyd said, adding that the brand has seen success in its home in Japan and in Australia, where it was launched two years ago.

In terms of market opportunities for RTDs, Boyd said the company is specifically focused on the US, which has become the “number-one RTD market in the globe”. She also highlighted Canada, “which is in the top five”, and Germany.

Canned cocktail opportunity 

While the company has a strong focus on bottled cocktails, Boyd hasn’t ruled out expanding its presence in the canned RTD space.

“Formats are important. We want to make sure that we’re delivering products that not only are differentiated but are compelling to consumers,” she said, hinting there is “more to come” from the company next year.

Beam Suntory partnered with The Boston Beer Company to launch Jim Beam Kentucky Coolers, a range of four canned flavours, earlier this year. The company acts as the distribution and production partner for Beam.

Boyd said the RTDs have opened it up to non-Bourbon drinkers and made whiskey more approachable. “We’re launching and investing in core markets to build [Jim Beam Kentucky Coolers] and expanding our partnership with Boston Beer,” she added.