Market researcher International Wines and Spirits Record (IWSR) is cutting back its projected growth expectations for the ready-to-drink (RTD) category.
Its recent report, an analysis on RTDs, examined 10 key markets: Canada, Australia, Brazil, China, Germany, Japan, Mexico, South Africa, the U.K. and the U.S. These collectively account for 83% of global RTD consumption with a total value of approximately USD $40 billion in 2022.
IWSR’s prior longitudinal analysis predicted 8% vs 5% volume compound annual growth rate (CAGR) from 2022–26, but now it is projecting a forecast CAGR of 2% between 2022 and 2027.
IWSR attributes the stalling to the decline in hard seltzers, whose share of the category is predicted to drop by 11 percentage points. Excluding hard seltzers, however, RTD volumes are estimated to grow at a CAGR of 5% over the same period, which reveal a maturing category.
The pace of new product releases has also slowed, from more than 3,000 in 2021 to around 1,000 in the first half of 2023, the IWSR notes.
The IWSR claims that the sector’s growth will be led by premium-and-above RTD cocktails and long drinks, which as the name suggests, is a higher volume drink, but with a higher percentage of mixer. The cocktails and long drinks subcategory is also expected to increase its share by four percentage points, representing a quarter of the RTD sector’s volume share by 2027.
This is based on the insight that 70% of the markets studied reported double-digit volume growth for premium-plus RTDs in 2022.
“Growth is slowing in an increasingly mature global RTD category, but opportunities persist in the cocktails/long drinks space and for premium-plus products that prioritize consumer-forward cues such as RTD base, alcohol by volume and flavour,” says Susie Goldspink, head of RTD insights for IWSR.
“The premiumization trend is moving in a variety of directions, from premium formats to a shift in ingredients and added functionality – all aspects that offer a point of differentiation to consumers,” Goldspink added.
According to Goldspink, while the pace of innovation has slowed, the effectiveness of new launches has improved, as producers are “more strategic and targeted in their product launches.”
New products recently launched in Canada include Labatt’s Cutwater, Ace Hill and challenger RTD Crawler, to name a few.
IWSR research also showed that consumers are drinking RTDs more often and exploring different subcategories.
According to the numbers, only 29% of those surveyed said brand was important to their choice of RTD. Also, about 32% of RTD consumers consider alcoholic strength when selecting a product.
Vodka remains the most popular spirit base for the category, but the IWSR believes second place gin’s decline in popularity could mean Tequila takes the runner up slot instead.
Finally, the IWSR found that the amount of RTD consumers drinking these types of beverages more than once a week increased from 39% in 2022 to 43% in 2023.
