RTD innovation shows rapid product transformation

Consumer demand for premium RTDs will be key in the future, with value growth outpacing volume growth at 8% vs 5% CAGR 2022–26, according to IWSR Drinks Markets Analysis. That equates to an increase in category value of an additional $11.6bn over the next five years.

A maturing category

The 2022 IWSR RTD Strategic Study examines and forecasts growth in the RTD category across 10 focus markets – Australia, Brazil, Canada, China, Germany, Japan, Mexico, South Africa, UK, and US – which cumulatively represent more than 85% of all RTD volumes worldwide.

RTD category volumes across the 10 focus markets will grow by 24%, although growth will be more moderate than in recent years as the US hard seltzer market (which currently makes up 60% of the RTD segment in the county) cools down. But this, in turn, is opening the doors for RTD innovation – particularly in spirits-based RTDs.

The rush of new brands and investments in the RTD category has spurred growth over recent years, with the category now reaching a more mature, stable growth phase after the highs of the pandemic (in fact, recruitment of new RTD consumers is now at its lowest level in three years, illustrating category maturity).

After the dominance of hard seltzer, its now time for RTD cocktails and long drinks to shine: offering more pizzazz than hard seltzers or beer and yet with accessibility and convenience in the can.

“Consumers in the US have grown accustomed to the convenience and variety offered by RTDs, which has increasingly led to people trading up to spirit-based cocktails. This reflects the overall spirits premiumization trend in the US and the popularity of bar-made cocktails,”​ says Brandy Rand, Chief Strategy Officer at IWSR Drinks Market Analysis. “As a result, hard seltzer volume is now projected to decrease after hitting all-time highs, which will lead to more moderate growth levels across the total RTD category.”​ ​