Spirit-Based Ready-To-Drink Products Will Pull $11.6 Billion In Growth Over The Next Five Years

There’s no slowing down the ready-to-drink (RTD) category. A new report from the IWSR, a global leader in beverage alcohol data and analysis, notes that the category value will increase by an additional $11.6 billion over the next five years.

The category’s massive growth is charged by consumer demand for more premium RTD products — in the category, value growth is outpacing volume growth by 8% vs 5%. This is largely driven by new entries of spirits-based offerings and well-known premium brand extensions. Flying Embers, Diddy’s Ciroc extension, William Grant’s bottled cocktails — all highly appealing alternatives to standard hard seltzers.

Volume-wise, the category is expected to grow by 24% over the last five years. That’s large, but moderate in comparison to previous years. (Understandable, as the last two to three years, have seen a huge influx of brands trying to ride the hard seltzer wave.)

The United States still commands the largest volumes and growth, though the IWSR expects this to temper as hard seltzer continues to lose momentum.

But the category still holds promise. Spirit-based RTDs — particularly vodka options — are pushing innovation, with 45% of the category volume credited to this subcategory. This category of canned cocktails — think mini old fashioneds, mojitos, negronis, and the like, plus gin-and-tonics — are spurring the most growth within the category.

The IWSR expects volumes of spirit-based RTDs to overtake hard seltzers by 2025. Cocktail products are forecasted to command 26% of the total category, compared to hard seltzer’s 20%.

“Consumers in the US have grown accustomed to the convenience and variety offered by RTDs, which has increasingly led to people trading up to spirit-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 studio forecasts growth in ten focus markets: Australia, Brazil, Canada, China, Germany, Japan, Mexico, South Africa, the UK, and the US.

“With the RTD category firmly established and competition at an all-time high, brand owners continue to

focus on innovative products and brand extensions or partnerships to drive greater awareness and

distribution. The RTD innovation IWSR is tracking year-on-year clearly shows a rapid pace of product

transformation to meet consumer demand,” says Rand. “There is no single dominant type of RTD globally, which makes the category uniquely positioned to capitalize on local tastes and trends.”

Digging into demographics, the report pulled some interesting insights. 50% of consumers are influencers to purchase RTDs from a well-known brand, though RTDs from local products also rate highly. Celebrity-backed brands rank lowest in terms of influence.

And, RTDs continue to woo customers away from beer — consumers will pay double for the same size serving of an RTD.