Posted on | May 1, 2010
Written by | Alia Akkam
In the past, liquor store aisles filled with ready-to-serve cocktails never received much traffic. Yet that was before the economic recession. Now that on-premise sales have dipped, customers are looking for new (easy) ways to make cocktails in their own home, and ready-to-drink (RTD) versions are coming to the rescue.
According to DISCUS total consumption for the category is up 25.9% from 10 years ago. And premium RTD cocktails rose 1.4% in volume and 1.1% in value from 2008–2009.
This upturn in RTD sales, undoubtedly sparked by value-seeking consumers keen on home entertaining without hassle, signals a ripe time for brand innovation.
Malibu, for example, the Barbados-made rum with coconut flavored liqueur, is the latest brand to see the benefit in introducing a RTD product. This July it will debut pre-mixed Malibu Cocktails in three flavors: Rum Punch, Caribbean Cosmo and Tropical Mojito, packaged in innovative, eco-friendly pouches made of soft plastic with leak-proof nozzles.
Pernod Ricard USA brand director of Malibu & Rums, Craig Johnson, says these lightweight offerings—designed to chill quicker—are ideal to throw in the cooler for seasonal outings. “We’re trying to get young consumers—people who love Malibu but want to drink it in a cocktail. Malibu consumers are the ones who told us Malibu should be in the RTD category,” he says. “These are people who take stuff a lot less seriously: they want fun, they want convenience and that’s what it delivers to those in a summer state of mind.”
Bacardi, which first introduced RTDs back in 1965, with the Bacardi Daiquiri Cocktail and original Bacardi Cocktail, also sees the importance of offering breezy, modern RTDs. In 2002 it tapped into the premium segment with its Bacardi Party Drinks line followed by Mojito and Raspberry Mojito Classic Cocktails. Now there are new Piña Colada and Strawberry Daiquiri additions. “Consumers have been going back to classic cocktails in the on-premise, and Bacardi has innovated an interesting twist on these legendary drinks. Both products have a key point of difference to the traditional versions,” says Gordon Chisholm, brand director, Bacardi Flavored Rums. The Piña Colada contains zero fat, swapping out coconut cream for coconut water, and the Strawberry Daiquiri is an on-the-rocks recipe, eliminating any time-consuming blending.
America’s Favorite Cocktail
The country’s top cocktail is the Margarita and Diageo spotted that trend back in 1993 when it launched the ready-made Jose Cuervo version. Over the past few years they’ve broken into the super-premium level with the creation of the Jose Cuervo Golden Margarita mixed with Grand Marnier. Michael Ward, SVP Innovation, Diageo North America, describes this product as “the archetype of building a great super-premium offering. It was really designed to replicate a freshly made Margarita, offering the complexity guests are looking for.” This summer Jose Cuervo’s hoping to leverage that popularity with pomegranate and mango Margaritas. “The ability to show how you can create a high-end cocktail that’s ready-to-serve from a top shelf offering makes a big difference. Frankly, people want to have more fun at home,” adds Ward.
Beam Global Spirits & Wine has also found great success with its RTD Margarita innovation, Sauza Margarita-in-a-Box. Launched in 2009, it already spawned the overarching Cocktail Cubes line earlier this year, featuring Sauza Strawberry Margarita and Cruzan Mojito flavors in addition to the original Margarita in easy-to-use packaging with a pour spout. “The Margarita is the most ordered cocktail in the world, so the Sauza Margarita-in-a-Box was a natural fit for Sauza,” explains Rachel Roberts, senior director of cordials and RTDs. “We wanted to provide a convenient, tasty way for Sauza consumers to enjoy a Margarita at home. It’s been a huge hit and we shipped nearly double our estimate in the first year.”
Proximo Spirits, Inc. sees the potential in the Margarita as well with its new product, the 1800 Ultimate Pomegranate Ready-to-Drink Margarita, the brand’s first flavor extension, featuring 1800 100% agave silver Tequila blended with pomegranate flavor and Persian lime extract. “When consumers are thinking what to order—at a bar or at home—they really think in terms of cocktails first, and secondly what brand they will make it with,” explains Michael Bennett, 1800 Tequila brand manager. “We work hard and invest a great deal to get them to combine the first two thoughts and stay with our brand. We’ve been developing the ready-to-drink range for the past four years, and it is performing extremely well. There is a lot more innovation to come, too—different fruit flavors, fresh agave nectar—all trends that we picked up from the world of mixology.”
Brown-Forman’s taken the margarita innovation to even new heights with el Jimador’s New Mix, a margarita-in-a-can. According to Brown-Forman’s annual report, it’s a RTD leader in Mexico, where it’s sold more than four million cases a year since its inception in 1997. With a track record like this, a U.S. debut was imminent. “The U.S. is the largest Tequila market in the world, so naturally the taste and appeal of el Jimador New Mix should do well here,” notes Mark Bacon, North American brand director for Casa Herradura. “el Jimador New Mix was pretty novel, but also intuitive because it eliminates the need to take all the mixers with you. Just place the cans on ice and you are ready for a barbeque, tailgating or any gathering with friends.”
It’s Okay to Have Fun
Pernod Ricard USA sells 150,000 cases a year of Kahlúa RTD, notably outpacing the category during October, November and December with two classics: Mudslide and White Russian. Holiday Spiced Nog, a limited edition offering unveiled last year, was very well received by both consumers and the trade. Overall, distribution of Kahlúa RTDs is up +5% versus last year.
The appeal of convenient RTDs is a no-brainer during the party-frequent holiday season. But summer may be an even bigger season for RTDs.
Daily’s demonstrates this with its bag-in-box cocktails and single-serve 8oz. Margaritas, Pomegranate Margaritas and Cosmopolitans. Frozen pouches of popular cocktails—Frozen Mojito, Margarita, Strawberry Daquiri, Frozen Pina Colada, and new flavors Peach Daiquiri and Pomegranate Margarita—make it even easier to whip up “homemade” cocktails when the desire strikes. Jack Daniel’s Country Cocktails has just introduced its newest flavor, Ginger Splash, joining Downhome Punch, Lynchburg Lemonade, Black Jack Cola and Jack’s Sweet Tea, all refreshing fits for the upcoming summer season. And Don Q Rum brings the ready-made Mojito to consumers who want to drink the iconic cocktail without having to deal with the hassles of mint muddling.
Tooters, the “shot” gurus, make cocktail consumption easy with Kamikaze Blues and Ala-Bama-Slamas. Boston Beer Company’s Twisted Tea, hard iced tea, comes in summery flavors like raspberry, peach, and backyard brew. And, SkinnyGirl, the ready-to-serve margarita from Real Housewives of New York City star Bethenny Frankel, flaunts just 100 calories per serving—ideal for the most weight-conscious of seasons.
Iconic Southern Comfort introduced ready-to-serve Sweet Tea and Hurricane cocktails last year, and its latest offering is Lemonade, which can be combined with the Sweet Tea to create an Arnold Palmer. “The pre-made cocktail category traditionally skews toward a female consumer but Southern Comfort RTDs are marketed to our current Southern Comfort drinkers, and consumers who tend to do more at-home entertaining,” points out Jay Finnegan, U.S. brand management director of Southern Comfort.
When deciding upon the development of a new RTD cocktail, Diageo’s Ward explores a number of appealing cocktail combinations at the bar and then looks to their portfolio’s trademarks to see which ones can deliver in ready-made form. One cocktail they saw with potential was the Long Island Iced Tea. “It’s the ultimate party cocktail and Captain Morgan is the ultimate party brand. Combined with vodka, gin and whiskey, Captain Morgan can bring the Long Island Iced Tea to life.” Others seem to agree—in 2009, it was deemed the most successful spirits launch by IRI.
Another big hit for Diageo is Smirnoff’s ready-to-drink vodka cocktails, including the perfect-for-summer Tuscan Lemonade, made with limoncello. Ward says Smirnoff’s versatility allows the brand to create cocktails for each season—sophisticated Martinis get a bump around the holidays, and summer’s the time to serve tall drinks. “The core idea is having cocktails that you know and love in that ready-to-pour fashion,” points out Ward.
The Proof Is In The Bottle
“We like to pioneer things at Proximo, and the mix market is ripe for innovation; there are too many ‘cheap’ looking products out there that do not offer a lot of benefit for the consumer,” shares Bennett. “I think the growth of cocktails at home has been hampered by producers not providing consumers with simple solutions.”
Convenience and usability are of paramount concern to consumers but brands also have to consider the logistical challenges of RTDs. For starters, these cocktails tend to hold broader appeal during the summer and holiday seasons. How can they spike traffic during “off-months”? Perhaps most importantly, brands have to prove to consumers that although these cocktails are not made-to-order by a bartender, they are still fresh and flaunt quality ingredients.
Because the Captain Morgan Long Island Iced Tea may not be sitting next to a bottle of the more well-known bottle of Captain Morgan Spiced Rum in stores, Ward says brand identification is one potential problem. Since RTDs usually aren’t placed in marquis locations in retail stores, his suggestion is “to make the section look as premium as possible, with good category management.”
Pernod Ricard’s Johnson agrees, saying the recognition of Malibu’s bottle will help stimulate brand awareness of the RTD pouches but he doesn’t depend on this marketing connection entirely. “Since the RTDs are not located where the Malibu is, we have to make it stand out on its own in the cold boxes. We have a strong display plan in place.”
Bacon points to el Jimador’s considerable value as a boon: “Consumers might be skeptical at first but just one taste and they will experience how good a ready-made Tequila cocktail can be. Each can is approximately $1.99. It’s almost impossible to find a great tasting quality Margarita or Paloma anywhere for that price.” Bacon looks to the New Mix as an extension of its 100% agave el Jimador Tequila. “What these RTDs do is show consumers how premium and delicious el Jimador Tequila can be in cocktails. The hope is consumers will want to buy a bottle and explore their own premium cocktail creations.”
Bacardi’s Chisholm says his plan is to market the Party Drinks and Classic Cocktails RTDs to consumers who are already swayed by ready-made convenience, typically males and females in the 25-35 range who know what they want, but believe making cocktails from scratch is time-consuming. “The challenges of this category are innovating with cocktails that can build on successful drink strategies to drive demand beyond seasonal windows.”
Brown-Forman’s Finnegan, however, isn’t worried. He feels it’s more of an opportunity than a challenge to showcase the versatility and mixability of Southern Comfort by offering pre-made cocktails in a convenient package. “Consumers are able to serve more complex cocktails, such as the Hurricane, with confidence they will deliver an enjoyable taste with every serving,” he says. Southern Comfort has gone so far as to even integrate the on-premise to reinforce its drink strategy in the bar by promoting Hurricanes and Sweet Tea cocktails.
Diageo too, has been able to create impressive momentum with its innovations thus far, partnering with the Food Network’s Sandra Lee to offer tips for hosting parties, and staying true to its internal benchmark of providing cocktails that are “as good as freshly made ones” through in-store sampling wherever legal. “It’s still a long journey but we’re showing consumers that you can, in fact, get quality drinks in this space,” says Ward.