Ready to drink (hereinafter referred to as RTD) is a very popular concept in the alcohol industry and even the entire beverage industry around the world in recent years. Simply put, ready-to-drink alcohol is pre-mixed beverages containing alcohol, including alcoholic soda drinks, pre-mixed cocktails, wine-flavored drinks, alcoholic coffee/tea drinks, etc.
Ready-to-drink alcohol is not a new concept. Premixed cocktails have been popular since 1900. Closer, every convenience store sells alcoholic beverages like rio or suntory and music. But the new round of RTD is completely different from them, and the momentum is quite fierce and violent.
RTD growth started in 2019. As of April 2019, RTD sales were up 40.7% from a year earlier, according to Nielsen data. In 2020, instant drinking has become the biggest winner of the alcohol industry under the impact of the new crown epidemic. According to the IWSR Beverage Market Analysis Report, the ready-to-drink (RTD) category is the only beverage alcohol sector expected to grow in 2020, with volumes expected to grow by 43%.
The popularity of RTDs has triggered an arms race. In the past three years, at least 200 new RTD beverage products have come out, and the RTDs that are now popular are basically new brands established after 2016. This wave of RTD impacts the space and moments usually occupied by beer and wine, just like the "sports and leisure" of the alcohol industry, expanding alcoholic beverages to a wider and more popular consumption scene.
In this article, we want to introduce the reasons why RTD can explode, analyze who is paying for it, and discuss whether the trend of RTD will disappear in the future.
Before talking about the reasons why RTD can explode, there is an industry background that cannot be ignored-data in 2018 show that global beer sales have declined for five consecutive years. Yet with a growing global economy (the IMF estimates global GDP growth of 3.1 percent in 2018) and a rising number of people of legal drinking age, the only answer is a waning enthusiasm for beer. As a result, RTD began to exert its strength at this time, becoming a more approachable alternative to beer.
The RTD category was once all the rage in the 1990s and around 2000, and now we can basically see brands that survived that era in convenience stores and supermarkets. The problem with these products is that the taste is too sweet, and the traces of the food industry are too heavy, so they are basically in a tepid dormant state.
The new RTD is aimed at a new generation of consumers who love green organic food and craft beer. They are positioned as more youth-friendly, artisanal, super premium and offer a range of complex flavours, ideal for consumers who find traditional spirits and cocktails difficult to swallow. In order to attract you to buy, whether it is health, flavor, or lifestyle, RTD beverages are all available, and it has everything you want.
In summary, RTD’s publicity focuses on the following four dimensions:
Natural materials, professional background, complex flavors
This round of RTD explosion began with some idealists in the restaurant industry. These independent innovators did not know that their collective efforts shook the sky of the RTD industry. This type of product usually maintains a focus on fresh, non-artificial ingredients, and seeks to break through the ceiling of flavor. So the final result is of course very amazing, but the output is indeed limited, and even the founder has to personally check each can of product.
For example, Jordan Salcito, a sommelier who has repeatedly won the "Oscar in the restaurant industry" James Beard (James Beard) established the Ramona brand. A sommelier at a restaurant, but she's like creating a wine drink that's tastier, more personal, and more portable. For another example, two ex-employees of the former "world's best restaurant" NOMA established Empirical, which is not restricted by some rules followed by restaurants, beer and spirits industries, and freely mixes flavors and fermentation techniques to create some novel flavors product. The entry of such small companies with the spirit of craft brewing into the RTD industry is the most essential change in this round of RTD trend. They have broken through the original limit and endowed RTD drinks with unlimited imagination.
Low calorie, low alcohol, low carbon, highlight a "health"
Low alcohol content is a concept that has been sought after by spirits, beer, and cocktails in recent years, and RTD has natural advantages. In addition, RTD can also choose gluten-free base wine and use natural sweeteners to cater to the health concept of the new era. Even the pickiest gluten-free eaters and vegetarians will find an RTD that's right for them.
In addition, since tea has long been associated with health claims, tea-spiked RTDs also add health-promoting ingredients such as turmeric, ginger, and berry plants to provide consumers with a health halo. While alcoholic beverages cannot be marketed as "healthy," RTD products can benefit from healthy ingredients and conceptual associations.
One step, convenience, industry support
Under the blessing of the two concepts of "flavor" and "health", RTD has become a very convenient choice. The same is mixed drinks, drinking at a bar is like going to a high-end restaurant, and drinking RTD is like eating a barbecue, casual, relaxed and satisfying. It also saves you from having to worry about materials and techniques when making cocktails at home.
RTD's can packaging also provides great convenience, which is convenient for carrying and distribution. In addition, RTD is also popular in swimming pools, festivals and concerts where the use of glasses is prohibited, so sales tend to surge in the second and third quarters of summer.
At first blush, RTD may appear to be grabbing the beer, wine and cocktail market, but it's actually being embraced by the bar industry instead. Many RTDs are inherently complex and suitable for cocktails, and some are even cheaper than existing materials. In addition, RTD does not need to be refrigerated, which is convenient for storage. Many RTDs work on building relationships with bars, promoting RTD products through the bar industry.
Packaging, Positioning, Image and Lifestyle
Today's consumers are more inclined to make choices based on their lifestyle and preferences than in the past, and the nature of the social media age means that packaging must be fast-appealing. Vibrant colors, simple designs, and slim cans are especially prevalent in the RTD category. This sleek and approachable aesthetic has made canned RTDs more popular, while also making them seem more premium than soda or beer products.
In the era of mobile Internet, consumption is endorsement. Especially among millennial consumers, who are keen to document and share their lifestyle and products that align with it. Therefore, RTD products are usually endorsed by Internet celebrities, media and professionals, so that you are willing to share this "taste choice", while arousing the curiosity of others through eye-catching designs. Most RTD branding is a carefully planned and perfectly filtered campaign.
According to Straitstimes, millennial (and Gen Z) consumers have played a huge role in RTD's success. The generation born between 1980 and 2000 is the mainstream of consuming RTDs, accounting for 54% of the total number of consumers. In addition, both males and females prefer RTDs, and there is no significant gender difference among the consumer groups.
The survey agency Link Fluence has drawn some interesting interpretations based on nearly 400,000 pieces of information collected on social media and websites in the United States: Millennials are undoubtedly at the forefront of consumption trends. In their gatherings, RTD is what they want Ask for "better drinks". Taste and quality are their most important factors, so the concepts of natural materials, low alcohol, gluten-free, etc. are especially important. In addition, data shows that millennial consumers care more about product evaluation, Internet culture and sense of identity than other age groups. Therefore, popular RTD brands are not only very successful in digitalization, but also actively participate in affirmative action, environmental protection and charity activities.
In contrast, millennials are not very sensitive to price factors. So the new round of RTD products usually has a higher premium. However, this does not mean that consumers are all lush leeks. The hottest White Claw is often criticized for its price. Even so, RTD's prices still can't compete with craft beer and craft cocktails.
In addition, millennial consumers also form consumer groups with different preferences due to different interests, values and lifestyles. For example, some people prefer to party and carnival, some people are more pursuing quality of life, and there are groups who are keen on outdoor and adventure. Their respective consumption preferences when choosing RTD are obviously different. Most of the new generation of consumers will not trust the brand, but to discover and choose according to their own preferences, which also leads to the diversification of RTD brands.
Although under the influence of the epidemic, RTD is currently the biggest winner in the wine industry, but new concepts are born every year. In a few years, will RTD be silent again? It's a history of RTDs being popular and then being ignored, so many reports are now taking RTD's prospects with a grain of salt. But it is undeniable that the sales of RTD are rising steadily, and this hotness is repeated in different countries.
Based on a combination of factors—including escalating beverage flavor demands, convenience, health concerns, and improvements in RTD quality and variety—more and more consumers are viewing RTDs as the answer to today's consumer needs and desires answer, which ensures that this beverage category won't disappear anytime soon.
Looking further, RTD products have undergone fundamental changes in the industrial structure, and emerging brands have dominated the impact on the beer and wine industries. And other players in the wine industry are not hostile to the rise of RTD, but they personally end up adding bricks and tiles to make this wind even bigger. People's consumption preferences may change in the future, but there is no ceiling in the category of RTDs. Once such ready-to-drink beverages occupy a place, people will not find a reason to completely abandon them.
However, compared with traditional categories such as beer and wine, the market share of RTD is still too small. But on the other hand, RTD intersects multiple fields of beer, wine, coffee, and tea, and it will always bring consumers a steady stream of freshness, which can satisfy everyone's imagination, and the prospects seem to be limitless. So there's still a huge question mark hanging over RTD's head.
The RTD jar contains the future, but will the future be as big as the jar? We will wait and see.
