Diageo announced its plans to increase hard seltzer production, including ready-to-drink (RTD) canned cocktails.  In order to grow production, the beverage company plans to add to its existing operations in Plainfield, IL. The approximately $80 million facility will have the bandwidth to produce over 25 million cases of canned cocktails annually.

Diageo aims to have the new facility ready for production over the summer, which should create around 50 new jobs in the community.

RTDs have been spiking in popularity over the last two years, further bolstered by social distancing related to the COVID-19 pandemic, as local safety guidelines have shuttered bars and restaurants. Even if they can’t enjoy a drink on-premise, consumers still want to enjoy bar and restaurant quality cocktails at home.

An increased prioritization of health and wellness has also contributed to the growth of RTDs, particularly those made with a clean label.

At the same time, the RTD segment and variety has expanded significantly. Spirits companies facing a decrease in sales due to the dip in on-premise business have been forced to turn to alternative revenue streams – including lower ABV beverages for different occasions, geared toward home consumption.

Diageo is ready to capitalize on this trend by increasing its RTD output. Its family of brands currently includes Smirnoff hard seltzer as well as RTD cocktails from Tanqueray, Ketel One Botanicals, and now Crown Royal.

The new lines will allow the beverage company to keep production in line with growing consumer demand. RTDs tend to be lower in alcohol than traditional cocktails. Many also boast low sugar, carbs, and calorie counts, in keeping with the spiked and sparkling standard set by hard seltzer.

Buying a variety of RTD is a relatively cost-effective way to stock one’s home bar. Rather than buying many different liquors and sugary mixers, one need only buy their favorite cocktails, shelf stable and pre-mixed. If one is hosting a socially distant, outdoor gathering, canned cocktails are easily transportable and require little clean up – just be sure to recycle your empties.

The sleek, modern packaging of RTDs also appeals to many. In addition to lasting a long time, many of these cans will look pretty on the bar shelf at the same time. Indeed, Instagramability is becoming an important ingredient of a canned cocktail’s success.

In addition to changing where, when, and what we drink, the pandemic has also shifted how we buy alcohol. More consumers are ordering libations online and having them shipped to the comfort of their own homes.

Industry analysts predict this trend to continue past the pandemic and predict that, by 2024, approximately 7% of alcohol sales will be virtual, according to data from ISWR. They further predict that RTDs in particular will account for 20% of US e-commerce alcohol sales in the same timeframe. Diageo plans to capitalize on the online sales trend by ramping up its e-commerce platform and expanding home delivery options.

Will Diageo’s increased production capabilities lead to new RTD offerings in the near future? The beverage company seems to be going all in on canned cocktails, but given the consumer climate it is likely a safe bet.

Erin Grafton
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