Why Whisky Soda is Passé and Ready-to-Drink Cocktail Culture is In

Radical transformation is indeed the new world order. Driven largely by the pandemic, it continues to percolate into every sphere of our lives, from the way we work, learn, purchase, to even how we socialize. Relegated indoors, the glamor of pub hopping was quietly replaced with a zest for experimentation and cocktail culture, setting off explosive growth in Ready-to-Drink (“RTD”) beverages. Today, the RTD market is the fastest growing segment in the global alcoholic beverage industry, expected to double by 2025 with a CAGR of 15%. Double-clicking on it reveals not just how consumers evolved their drinking habits, but also how organizations (and startups) found new possibilities in their present scope of business.

Evolving Consumer Habits and Explosive Growth in RTD Beverages

In a recent Benori poll, 80% of participants confirmed that their willingness to choose a RTD beverage was driven by convenience, co-affirming the three core contributors of the explosive growth in RTDs, as discovered in our research:

• Convenience: The pre-pandemic palate comprising beer, wine and other spirited drinks is now replaced by anything that goes with the urban millennials’ busy, on-the-go lifestyles, without compromising on premium taste and quality. Supported by a rising disposable income, alcohol consumption has clearly moved beyond its purely functional benefit to straight-out-of-the-pack drinking.
• Safety: Extended lockdowns and lack of socializing enforced a change in drinking habits toward mixology. In fact, the absence of the bartender prompted our drinking population to take the matter in their own hands, contributing significantly towards the collective acceptance of RTDs in the market.
• Pricing: With the pricing being similar to beer, RTD makes for the perfect alternative for those going for a balanced mix of taste and intoxication. The low alcohol content in RTDs allow sellers to have their products taxed under the “low-alcohol beverages” category (though state taxes vary) with a focus on volume-selling.

How Alcohol Beverage Companies Widened their Scope of Business (and Influence)

Having pioneered the category over two decades back with the popular Bacardi Breezer with 5% alcohol content, Bacardi has enjoyed over 90% market share in RTDs. But this reality is fast-changing. Pushed to think differently, top liquor manufacturers including Pernod Ricard, Brown-Forman, Radico Khaitan and Diageo have all invested in new canning lines, expanded production capacity, and launched a range of competing RTD products of their own: from whisky- and vodka-based cocktails, canned pre[1]mixed gin and tonic, and other DIY cocktail innovations, indicating a healthy sign of progress in the segment. No surprise that even Jack Daniels has launched a readymade Jack & Cola, “often cited as the world’s most popular branded bar calls.”

Influenced by the rising innovation and expansion in the alcohol beverage industry, startups including Jimmy’s Cocktails, RockClimber, RM Beverages and Salud Beverages have accelerated the RTD competition further by raising alcohol content, adding new flavors, creating canned content, and introducing new mixology trends. Even non-alcoholic beverage brands, from water, coffee and energy drinks, have made aggressive crossovers to RTDs, developing new strategic partnerships with liquor manufacturers to leverage their now-evolved distribution systems.

The Way Forward for RTD Beverage Companies

With almost a third of global drinkers now choosing RTDs, the competition is fierce between both big and small players to increase their stakes in this new domain. Industry leaders are clearly driving growth in the market and simultaneously inspiring startups to enter the space as well. But as curbs get lifted across the world and public life returns to normal in the coming months, demand will at least reach pre-COVID levels again, making it more challenging for organizations to increase their market share. To emerge victorious in the RTD game, innovation needs to be driven through new product development, upgrading existing portfolios, entering new markets, forming strategic new partnerships and much more.