RTDs Explode in 2020

When the history of this most unprecedented of years is written, many things will be said about 2020. In spite of all its challenges, one exciting development has been the explosion of ready-to-drink (RTD) canned cocktails.

If 2019 was the Summer of White Claw, 2020 will go down in the books as the year of the RTD. Alcohol delivery service Drizly reported the RTD segment, which includes hard seltzer in their calculations, grew 416 percent in year-over-year sales.

Hard Seltzer Paves the Way

The exponential growth of RTDs has been assisted through the popularity of hard seltzers like White Claw and Truly. The hard seltzer space has expanded to include spiked and sparkling cocktails that are spirit-based in addition to the more traditional malt beverages that popularized the category.  

But hard seltzer did something else.  It served to open the eyes and broaden the scope of hardcore beer drinkers.  Boston Beer successfully responded to consumer demand with Truly, at the risk of cannibalizing its Samuel Adams sales.  It certainly helped to propel founder Jim Koch to the Forbes 400.

Perhaps craft beer was just getting too complicated, too high in carbs and calories, in its quest to innovate and differentiate in a crowded field.  At the craft beer target market shrank, hard seltzer stepped in to expose drinkers to a new world of flavor in a can.  The “Craft Beer Marketing Awards” now even include hard seltzer.

Big Brands Invest Heavily

Iconic spirits brands including Jack Daniels, Jose Cuervo, and Tanqueray have released their own canned cocktails this year. As the bar and restaurant industries continue to face restrictions due to the ongoing COVID-19 pandemic, liquor companies scrambled to find ways to replace these lost on-premise sales.

Jack Daniels, for example, is one of the most popular on-premise brands in the world. Around 30 percent of the whiskey’s annual sales come from restaurants and bars. But in light of bar and restaurant closures around the world, the Brown-Forman brand saw sales decline by seven percent.

One way to remedy struggling on-premise sales is to introduce a beverage meant for consumers to enjoy at home, or anywhere off-premise for that matter, which is exactly what Jack Daniels did.

“You’ve got to find ways to get to consumers that are outside of the bars. But I think we will be pretty effective in communicating that and getting that to them” said CEO Lawson Whiting of the company’s new whiskey-based RTDs, which were introduced over the summer.

Introducing an RTD is also an innovative way to drive excitement back to a spirits brand, as Jose Cuervo did with the new Playamar. The tequila-based RTD is available in lime and grapefruit flavors, meant to mimic a classic margarita and paloma respectively.

Proximo, Jose Cuervo’s parent company, saw sales invigorated by the new canned cocktails. “We almost doubled our RTD and prepared cocktails business over the second quarter, giving a lift to our business overall,” says Lander Otegui, Proximo’s Chief Marketing Officer.

The Pandemic Factor

The COVID-19 pandemic has changed the way consumers drink alcohol, among other things. As people continue to hunker down and shelter in place, they are also looking for ways to mark different occasions safely. As a result, they’re bringing craft cocktail culture back home with them.

While some consumers opt to buy all of the ingredients to make their favorite cocktails from scratch, this can be costly and complicated for a society of instant gratification. Many are just as excited to sample the new pre-made cocktail options popping up at their local liquor stores or Instagram feed.

Data provided by market research company Nielsen indicates that RTDs were certainly gaining popularity before the pandemic hit, but the circumstances surrounding the coronavirus have accelerated that growth.

Pre-pandemic, RTDs experienced 21.5 percent year-over-year off-site growth. However, during the 23-week pandemic period ending on August 8th, growth was up 86.8 percent, according to Nielsen.

You CAN Take it With You

One explanation for the spike in popularity is the fact that canned RTDs are one of the most portable potables. As people are moving their socially distant gatherings outside, packing some canned drinks in a cooler with ice is easier than lugging cocktail ingredients around, or even wine and all of its necessary accessories.

“They are great for people who are willing to socialize [but want to] minimize contact by doing so outdoors,” says Jill Burns, co-founder of Austin Cocktails with Kelly Gasink, an RTD company dedicated to creating small batch craft cocktails made with real spirits and real ingredients.

Unlike the overly-saccharine wine coolers of yore, many of today’s RTDs boast premium profiles and organic ingredients. Now more than ever, consumers are seeking out healthier, better-for-me options that still contain the kick of alcohol.

Ketel One’s Botanical Vodka Spritz is a prime example, with its low calories (73 per serving) and even lower alcohol (3.6 percent ABV). It was crafted with the wellness crowd in mind.

“We created Ketel One Botanical to appeal to the conscious consumer. We care as deeply about what goes into every bottle, as they care deeply about what they are eating and drinking. That sentiment rings truer than ever in a world where caring for ourselves and each other is a priority, and ease without sacrificing quality is so important,” said Carl Nolet Jr, one of the 11th generation family owners.

High Noon Still on Top

According to data from Drizly’s delivery sales, the canned vodka soda High Noon is by far the strongest selling RTD. E & J Gallo’s High Noon is designed to look very much like a hard seltzer; it’s made with real vodka and real fruit, contains 100 calories per serving, and is both gluten and sugar free.

Not only is High Noon Drizly’s top-selling RTD brand for 2020, but the vodka soda’s individual flavors and the variety pack occupy spaces one through seven on Drizly’s list of the top-selling RTD SKUs of the year. High Noon Hard Seltzer currently offers Black Cherry, Grapefruit, Lime, Peach, Pineapple and Watermelon.

Although safety restrictions that keep patrons away from bars and restaurants may be helping to drive RTD sales, don’t expect this trend to disappear once there is a vaccine available. Market research firm IWSR expects the RTD category to continue growing at a rate of 11.5 percent between now and 2024.

With iconic spirits brands like Jack Daniels, Ketal One, and Jose Cuervo driving adoption and offering premium craft cocktails, we expect this space to continue evolving in the future to keep bringing consumers exciting new drinks options.