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Cocktails in a Bottle: Premium, Premixed Cocktails Drive Innovation in the Ready-to-Serve Category

Posted on  | November 28, 2012   Bookmark and Share
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With all the bar buzz on house-made syrups and bitters, artisanal infusions and beloved mixologists, it seems everyone must be on the crafted cocktail bandwagon. Not so. Ready-to-serve (RTS) cocktails are consumers’ dirty little secret—simple for entertaining and the fraction of the price of a fancy drink. While many in the business may scoff at premade cocktails, new brands and exciting flavors are proving to be easy to swallow—to the tune of 6.8 million 9L cases alone last year, a 6% increase over 2010 according to Impact Databank.

To clarify, RTS products are distinct from RTDs (ready-to-drink), which are single-serve, often malt-based brands like Mike’s Hard Lemonade or Smirnoff Ice. RTD cocktails represent about 55% of the overall category, with RTS making up the other 45%.

Lorena Streeter, marketing communications manager for Florida’s ABC Fine Wine and Spirits, sees a shift across her approximately 145 stores across the state. “Over the years, we’ve seen RTDs go from primarily single-serve or two-serving cocktails to a category dominated by larger-sized bottles that you’d pick up for a party. It’s also become a category largely driven by brands, whereas years ago you’d find a single company making a range of drinks with a variety of spirits.”

While most major suppliers have played in the RTD and RTS category for years, a host of new brands and packaging has changed the landscape. This batch of party-friendly RTS cocktails caters to younger, trend-setting enthusiasts who have developed a taste for mojitos and other popular cocktails, but may have no idea how to make them. The category is also geared toward the price-sensitive consumer who recognizes the convenience and savings of not having to purchase and make a cocktail from scratch. Tom Tesauro, partner in Massachusetts-based Yankee Spirits, says, “Many of our customers are a bit intimidated and mystified when it comes to mixology. Ready-to-drink offerings help them overcome this challenge.” He adds that, as a category, RTDs are young and volatile: “There is a constant stream of new offerings as well as frequent discontinuations.”

 

Similar to on-premise, the Margarita is the most popular cocktail among both RTS and RTD brands, followed by the Cosmopolitan. Diageo controls more than a third of the category with its offerings, most notably under the Jose Cuervo and T.G.I. Friday’s brands. Line extensions from Smirnoff and Captain Morgan continue to perform well. Bacardi has maintained a firm position with its Party Drinks and Classic Cocktails lines. Kahlúa and Jack Daniel’s are two other well-known brands joining the ready-to-party bandwagon.

Getting Skinny With It

There’s a notable catalyst to the growth and innovation in the RTS category, and it can be traced back to 2008, when on-premise spirit sales declined 2.2%, the first time the industry had seen a dip since 1995. Consumers began to curtail their spending by drinking at home more often. About this time, popular reality TV star Bethenny Frankel decided to launch a calorie-conscious bottled Margarita under the brand name Skinnygirl. It was an overnight success, ultimately purchased and extended by Beam Inc. in 2011. The Skinnygirl brand grew by 81% in the first half of 2012, buoyed by the introduction of Skinnygirl vodkas and wines.

Fast forward to 2012, and “skinny” is used so often on both cocktail menus and liquor bottles, it hardly needs an explanation. Nearly all the major players in the RTS category have introduced lower-calorie versions, citing this trend as a reflection of the busy, social, health-conscious female.

In May, Bacardi announced actress Busy Philipps as the spokesperson for their new Bacardi Classic Cocktails Light. Christina Perez-McDowell, brand manager at Bacardi USA says the brands are “a new staple for sophisticated at-home entertaining…offering [consumers] a way to enjoy more time with their guests, without sacrificing flavor or style.” At less than 95 calories for a 4 ounce serving, Bacardi promotes the line as being made with natural flavors, real juice and pure cane sugar.

 

Campari America came out with a brightly packaged Midori Skinny Margarita as well as a RTS version of the core Midori Sour cocktail in July. Many new brands are entering the market, like CountryGirl Cocktails, which counts on a partnership with Nashville record label Average Joe’s Entertainment to reach its core female target through product placement at concerts, in music videos and promotional contests. CountryGirl Director of Marketing Serra Justice points to the 16% ABV as being a point of distinction: “This slightly higher alcohol content gives CountryGirl Cocktails a bold taste while maintaining the sweetness desired by most RTD consumers.”

According to IBISWorld, women account for 55% of RTS purchases, and most are under 30 years old. But don’t count out men in the low-calorie RTS craze—VeeV Spirits, known for its VeeV Açaí liqueur, has entered the category with VitaFrute cocktails, aimed toward both genders. The line launched with Margarita, Cosmopolitan and Lemonade flavors and is all-natural, organic and 125 calories per serving.

Trading Up

Cocktails are perceived as more premium to drink than beer, a point that holds true in the spirit-based RTS category as well. According to DISCUS, 20% of the category is premium, and that is a segment that is growing, especially the “skinny” brands notes Streeter at ABC.

At all three Yankee Spirits locations, Tesauro says the RTD and RTS category has become highly competitive, with innovations in various packaging and flavors coming faster than most retailers can handle. “Over the last several years, we’ve seen real trade-up in this category with more premium offerings. Where value brands like Ice Box and Chi Chi’s once dominated, we now see more premium offerings like the Cuervo Golden Margarita, Bailey’s Mudslide and the offerings from Bacardi—all of which retail in our store in the mid to high teens for a 1.75 liter. We now have 750mls of Skinnygirl flying out the door at the same price as a 1.75 liter of the value brands.”

 

Staying Power

With cocktail culture in full swing, the average consumer will continue to experiment with premade drinks. The benefits of price and convenience coupled with more at-home entertaining all point to more supplier investment in the category.

Elsewhere in the world, bottled cocktails are more commonplace than in the U.S.; Australia, Russia and Japan account for 75% of the global RTD/RTS volume. The United States accounts for a mere 2%—a number that may well creep up with the more premium offerings entering the category.

Keeping track of the various premade cocktail brands is no easy task. The chart we’ve compiled of some of the most common spirit-based RTS cocktails offers just a snapshot of this flavorful, growing segment.


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