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You’ve probably noticed that the ready-to-drink (RTD) beverage category has been growing like gangbusters in recent years. With the myriad of choices now available to customers (and summer being prime time for refreshing, portable beverages), let’s get a closer look at the RTD renaissance, including how and why it’s grown and what you need to know to help your customers pick the perfect beverage for their warm weather activities and festivities.

 

The Exponential Expansion of RTDs

 

RTDs have come a long way since the early days of 80’s wine coolers. The category, once associated with low cost, low quality, candy-colored sugar bombs, has completely remade itself into one awash with premium beverages touting sophisticated flavors, wellness-conscious ingredients, and quality craftsmanship. And the sales data clearly show that this make-over is checking all the boxes for today’s consumers. 

 

According to a recent report by the Distilled Spirts Council (DISCUS), between 2020 and 2021, RTD suppliers saw a 42% jump in revenue, bringing in a total of almost $783 million globally. A 2021 ISWR Drinks Market Analysis found that RTDs surpassed spirits and wine as the second-largest alcohol category by volume in the U.S. 

 

Even as many of the pandemic-driven changes in the alcohol industry have levelled off, the RTD sector continues to grow at a rate one and half to three times greater than other leading alcohol sectors, making it also the fastest growing category in the industry. By 2030, it’s predicted that the RTD market will be worth a staggering $2.43 billon. 

 

Why are RTDs having such a heyday? The answer is threefold: changing consumer preferences, advancements in technology, and evolving lifestyles. 

 

1. Changing Consumer Preferences

 

Changing consumer preferences are a central driver behind the category’s massive growth. Convenience is a top priority for today’s busy drinkers, and easy-to-grab, on-the-go options that need minimal prep time or effort fit the bill beautifully. Throwing a few margarita cans in a cooler on the way out the door for a pool party or picnic is certainly quicker than busting out the blender and finding a clean tumbler that won’t leak. RTDs also offer an easy, no-bar-tending-skills-required way to enjoy a well-crafted cocktail from the comfort of home, or to cater to a variety of tastes when entertaining at home—both of which are trends that spiked during the pandemic and continue to remain popular. 

 

 

2. Technology Advancements

 

Advancements in technology have also played a significant role in the industry’s expansion. Innovations in beverage formulations and processing techniques have allowed for the creation of new and unique flavors, textures, and functionalities, meeting and fueling consumers’ demand for variety and nuance. 

 

Improved manufacturing techniques have also enabled producers to extend the shelf life of their products without the need for preservatives—a big selling point for the ever-growing army of health-conscious consumers (more on that below). And creative packaging keeps the category interesting and appealing to a broad range of consumers, who can now choose from cans, bottles, balls, pouches, ice pops, and more.

 

3. Evolving Lifestyles

 

Today’s consumers are obsessed with wellness and pay closer attention than ever to the ingredients in their products. In response, the RTD sector has wasted no time jumping on board various health-related mega and micro trends. Low-sugar, low-calorie, low ABV, organic, gluten-free, or plant-based options abound; while functional beverages touting the added benefits of probiotics, antioxidants, adaptogens, and vitamins allow consumers to choose a drink that aligns with their health and wellness goals. 

 

RTDs also fit in perfectly with today’s social media driven lifestyles. Millennials and Gen-Z in particular, for whom documenting their carefully curated lives is a way of life, RTDs offer no shortage of Instagram-ready products that align with their aesthetics and values.

 

Types of RTDs

 

Now that you have an idea of the “what” and “why” behind the RTD market expansion, here’s a high-level overview of the options customers now have available to them. The demand for innovative and diverse offerings has allowed a proliferation of new players to enter the scene, including small start-ups, craft creators, and well-established commercial brands. 

 

  • Malt-based RTDs hold the largest market share (approximately 91%) and include hard seltzers, ciders, hard teas, and flavored beers. These beverages use fermented barly as their base ingredient, although alternative malt bases, such as sorghum, cassava, maize, or rice, are growing in popularity to accommodate different dietary demands (i.e. gluten free, etc.). Malt-based RTDs are taxed/regulated to the same standards as beer. i.e. gluten free, etc.). Malt-based RTDs are taxed/regulated to the same standards as beer. 

 

  • Wine-based beverages use wine as their alcohol base, and typically include ingredients like carbonation, fruit juices, or other flavorings. In terms of growth and depth, this particular category remains the smallest, accounting for only 1% of the total RTD market. The most common iterations are wine seltzers and wine cocktails. These RTDs are taxed at the same, slightly higher rate as wine. particular category remains the smallest, accounting for only 1% of the total RTD market. The most common iterations are wine seltzers and wine cocktails. These RTDs are taxed at the same, slightly higher rate as wine. 
 
  • Spirit-based RTDs, on the other hand, are quickly growing in popularity and availability. IWSR’s analysis showed a 53% increase in 2021, which is approximately double the growth of the wine-and malt-based categories. These ready-made cocktails feature a base spirit, such as vodka, rum, gin, or whiskey, and come with a seemingly endless variety of mixers and flavors. As this category expands, it is facing some distribution roadblocks due to the stricter regulations and high taxes spirits incur. , on the other hand, are quickly growing in popularity and availability. IWSR’s analysis showed a 53% increase in 2021, which is approximately double the growth of the wine-and malt-based categories. These ready-made cocktails feature a base spirit, such as vodka, rum, gin, or whiskey, and come with a seemingly endless variety of mixers and flavors. As this category expands, it is facing some distribution roadblocks due to the stricter regulations and high taxes spirits incur. 

 

Whatever category of RTD your customer is interested in, be sure to encourage them to check a beverage’s label for things like base ingredients, alcohol content, and serving size. 

 

As you consider what RTDs to add to your arsenal of summer-ready beverages, be sure to use the new RTD filter in the top of the left navigation of SGProof.com, which allows you to search RTD products by wine, spirits, or beer. Cheers!