World Spirits Report 2023: RTDs

Ready-to-drink serves (RTDs) have become increasingly mature across the world as drinkers adopt the convenient format and flavourful options.

Despite growth estimates slowing, the category is expected to post a double-digit increase (12%) between 2022 and 2027 across 10 markets, data from IWSR Drinks Market Analysis showed. Earlier estimates had predicted a 24% increase over the five-year period, but this has been dragged down by a decline in hard seltzers in the US.

Excluding hard seltzers, RTD volumes are estimated to grow at a compound annual growth rate of 5% over the same period, led by premium variants and long drinks. The value of the category is predicted to reach US$40 billion by 2027 across 10 key markets.

IWSR expects agave-based RTDs to take off as the next most popular spirit base for RTDs after vodka. Research from IWSR found that 41% of consumers named Tequila as their favourite RTD base (up from 35% in 2022). Among Gen Z consumers, the figure is 60%.

Wynter Karo, co-founder of Tequila-based pre-mixed brand Pimentae, says: “The market is evolving rapidly, and we’ve observed a surge in demand for innovative flavours and premium ingredients.”

Karo believes opportunities for growth in the RTD category “lie in expanding product range, entering untapped demographics and international markets”. She notes that the biggest challenges are “fierce competition, and the need for continuous innovation to stay ahead”.

Ben Iravani, co-founder of Whitebox Cocktails, believes there is a challenge in products that fail to replicate the flavours of cocktails. “We see the misuse of cocktail names on RTDs to be an issue as it clouds the consumers’ perspective of what a classic cocktail should taste like. For example, a 4%-ABV, 250ml fizzy can that’s labelled as a Margarita just doesn’t come close to what a classic Margarita recipe is and how that would be served in a cocktail bar.”

He believes the category still has a “long way to go, particularly for the premium side”. Iravani adds: “We’re focused on providing customers with an elevated experience,
a moment to savour, which aims to take market share from beer and wine. We see a lot of potential in this ‘treat’ occasion.”

Iravani expects more “diversity in the use of premium spirits bases, brands finding niches, and more competition coming”.

Karo adds: “We anticipate a rise in low-alcohol and non-alcoholic RTDs, reflecting the increasing consumer focus on health and wellness. Additionally, eco-friendly packaging and sustainable practices will likely gain prominence in response to environmental concerns.”

Click here to read our World Spirits Report for the liqueurs & speciality spirits category.

Brands to watch in 2024

Whitebox Cocktails

The bartender-founded brand doubled its fundraising goal this year to drive its global expansion. Whitebox has experienced 100%-plus growth in 2023 to date, with 400% sales growth in the US in its first months of entering the market. Over the next year, Whitebox plans to more than double its number of cocktails, increase its production capacity and distribution channels, and grow its sales team.

Pimentae

The Tequila-based pre-mixed brand recently gained a £300,000 investment from Diageo’s Distill Ventures arm, alongside £245,000 from angel investors. After seeing growth of 200% in the year to November 2023, the company has its sights set on growing nationwide in the UK, and has plans to launch in the EU.

Served

Brewing giant Heineken gained a “significant minority” stake in Served, co-owned by pop star Ellie Goulding. The company has big plans to establish it as a leader in the UK RTD market. With Goulding’s backing, plus its recent move into canned cocktails, it could be poised for further success.