RTD: The RTD Renaissance

The RTD Renaissance

Diversification of flavours, higher strengths, and canned cocktails reflect a competitive category that has reached maturity, writes Seamus May.

The RTD category continues to go from strength to strength, with IRI data confirming the market continues to outperform, valued at $3.9B.

Premium products, new entrants and incremental growth all suggest that the RTD category is firmly in the ‘resurgence phase,’ according to a number of analysts including IRI and IWSR.

Hard seltzer now represents the largest growth generating segment within the category, with bourbon and North American whiskey RTDs in second place, while gin is third. Dark spirit RTDs still lead in terms of total value, but NPD in the seltzer space has led to that segment to become the fastest growing.

The RTD sector is now also home to a diverse collection of styles and offerings to suit consumers of all kinds: ranging from the sweet and strong, to lighter expressions that sit firmly in the ‘better for you’ space.

A congested category

As ever, growing categories tend to attract new market entrants, and the RTD sector is increasingly competitive.

In a presentation at the recent Bloody Big Drinks Summit, market research organisation Snooper discussed that brand loyalty amongst drinkers of hard seltzer was low.

“48 per cent of our shoppers would actually pick a different brand during their next visit to the shop,” said Laurie Wespes, Snooper CEO, during the presentation.

So how are brands vying for customers in an environment where drinkers are likely to jump from product to product?

One well-trodden path is to firmly pursue the ‘better for you’ buyer, as new entrant Tattoo Me Cooler has demonstrated. The brand was founded late last year by Helen O’Brien of winemaker, Kangarilla Road.

“The trends Tattoo Me Cooler are focussing on include the desire for a lower alcohol drink that fits the lifestyle of people who care about what they put into their bodies,” O’Brien said.

“Our hard seltzers are sugar free, gluten free and vegan friendly, while having fewer than 85 calories, and an alcohol content of only 4.5 per cent.”

Saintly is another brand hoping to capture the custom of conscious drinkers, as Co-founder Kieron Barton explained: “Our purpose as a brand is to meet their need for healthier, bang-on trend drinks, that never compromise on taste and flavour and consistently deliver incredible refreshment.

“We are passionate about serving Aussies full-flavoured and incredible tasting drinks without the calories, the sugar, or carbs.”

Another success story in the RTD category is Ampersand Projects, which launched in 2018 and is now one of the most engaging RTD brands in Australia. Even in these four years of operation, Co-founder and Director Alex Bottomley has seen a proliferation of RTD brands.

“There is no doubt that the RTD category has exploded, with more and more drinkers coming into the category,” he said.

“We are lucky that we have a first mover advantage as one of the first RTDs to really embrace the ‘better for you’ approach in Australia and this has helped us maintain a competitive advantage.

“We are also an independent company that engages and interacts with our consumers in a way that big corporate brands cannot.”

While RTDs have long been associated with Australia’s younger adult drinkers, many brands reported that they are seeing diversified demographics purchasing their products.

“Our portfolio has grown to over 18 products, and we are now appealing to a much wider range of audiences,” Bottomley said.

Michael Ritoli, General Manager of CUB Premium Beverages at Asahi, which owns Vodka Cruiser, said: “Vodka Cruiser has a very wide demographic of

drinkers, with more men buying into the brand over the last few years.”

Barton has also noticed this shift at Saintly, and said: “We see our demographic expand further to include older millennials.”

Focus on strength

Barton, who had previously helped launch Rekoderlig Cider with his Chilli Marketing firm, has also observed another trend among RTD drinkers — the desire for higher strength products.

“Saintly was curated for a new generation and movement of people seeking healthier beverages without compromising their wild side,” Barton says.

Bottomley echoed that notion and said: “We are seeing drinkers gravitate towards a slightly higher ABV RTD option to better replicate the strength that they would normally expect to get in a vodka soda in the on-premise.

“We think that the light RTD category will trend towards higher ABV drinks in 2022. We have just released a six per cent ABV version of our popular Vodka Soda & Pine Lime to support this trend.”

Meanwhile, Vodka Cruiser, which has remained one of Australia’s highest performing RTDs for more than two decades, has also noticed some changes in the ABV preferences of RTD consumers. This has just been another changing trend the brand has had to weather to maintain its position at the top. According to Ritoli, it has been this agility of Cruiser that has allowed the brand to maintain its position.

“Cruiser has been a nimble brand that’s been able to evolve at the speed of culture and stay relevant with young adult Australians for over two decades,” he said.

Ritoli has found that stronger expressions have also resonated with the Vodka Cruiser customer, as the brand’s higher ABV Cruiser Black has seen a recent surge. Newer, independent brands have brought creativity and diversity to the category in different ways, but favourites do still have a strong place.

“At the end of the day shoppers are still passionate about trusted, familiar brands like Vodka Cruiser, that also consistently surprise and delight,” Ritoli said.

“Cruiser will always predominately be a brand for young adult Australians looking for fun, flavour and colour.”

The sustainability angle

Going hand-in-hand with the growth of the ‘better for you’ trend is a widening commitment to sustainability. Across the RTD sector as a whole, National Liquor News found that every brand contacted for this story was conscious of their responsibility to the environment.

Certain brands have made sustainability their key point of difference with SouthTrade International’s C.A.N and Brown-Forman’s Part Time Rangers being two examples.

SouthTrade International’s Marketing Director, Fraser Lockwood, told National Liquor News how the C.A.N brand of vodka soda RTDs brought together the two industry movements.

“‘Better for you and the planet’ remains a high consumer preference in the market,” he said.

“C.A.N plays into the better for everyone category, not only due to more 10 per cent of our profits being donated to Aussie conservation but because we are low sugar, low calorie and four per cent ABV.”

Indeed, C.A.N (which stands for Create Action Now) has made sustainability the central driver of their brand.

“Our core purpose is about reducing the impact on the environment as well as proactively doing our bit to clean up,” Lockwood explained.

“As C.A.N starts making waves across Australia, we want to live and breathe our brand ethos, that’s why any C.A.N assets that are developed are all recyclable or made from recycled materials. Our team are also passionate advocates of conservation initiatives and we’ve worked on several projects with Conservation Volunteers Australia.”

Recent events have brought C.A.N’s mission into a keen focus for Lockwood and the team.

“We’ll also now turn our focus to supporting flood affected areas, given the huge challenges QLD and NSW are facing in the years ahead to recover from the recent devastation,” Lockwood said.

“With over and above donations and activity, we stand to exceed our 10 per cent committed donation and contribute 15 per cent of our brand profits to conservation initiatives.”

Similarly, Tattoo Me Cooler contributes part of its profits to Seabin Project Australia, a company which is working on solutions to the problem of marine litter.

And Part Time Rangers also operates in a similar space, raising funds to support wildlife projects and charities through its range of gin and vodka based RTDs. Brand Manager, Ashleigh Wheeler, said Part Time Rangers has raised over $450,000 to support a range of charitable causes, from animal preservation, to increasing employment and pay equity. Organisations that Part Time Rangers has partnered with include the WWF, Rhinos Without Borders and Save The Kiwi.

“Part Time Rangers’ primary purpose is to support the longevity of wildlife for generations to come, so with that in mind we have an ongoing lens for decreasing impact on the planet,” Wheeler said.

This commitment to the environment even extends to marketing materials, with the brand’s POS displays only using soy ink and recyclable materials.

This type of approach touches upon a growing trend across the RTD category - sustainability in packaging and processes, beyond just financial donations.

“Sustainability is an important part of our decision-making when it comes to manufacturing and raw materials,” Bottomley said.

“We have chosen to use aluminium cans for the vast majority of our products due to their recyclability.”

Likewise, both Tattoo Me Cooler and Boski, a new brand of wine-based RTD from Dee Vine Estate, have gone down a similar path, with both choosing to partner with sustainable packaging, printing and supply organisations. Saintly meanwhile is working towards getting its B Corp certification, which the company hopes to achieve later in 2022.

Larger brands are also getting aboard the shift towards greater sustainability, as Ritoli noted: “Sustainability is a key pillar of our business.

“From a production point of view, all primary packaging used in Asahi Beverages products (including RTDs) will be made with 100 per cent recyclable, reusable or compostable materials by 2030.”

Favoured flavours

Wespes said that Snooper’s analysis had found 66 per cent of drinkers were more likely to purchase hard seltzer products if new flavours were available.

As Wespes said: “The most important driver was definitely the novelty in flavour, even more important than discounts.”

This means that the creation of new flavours and products has become a key battleground in the RTD and hard seltzer category.

For Tattoo Me Cooler, this desire to produce innovative flavours led to a great deal of work in development, as O’Brien outlined.

“We trialled many different natural flavours from two Australian producers and worked with combinations of one flavour and multiple flavours. We worked with focus groups and then trialled the most popular ones with our friends who fit into our demographic,” she said.

“We flirted briefly with a different combination for the pear-based seltzer but the lychee had the most appeal. The mandarin and yuzu was an immediate winner.”

Fellow new market entrant Boski is hoping that its wine-based RTDs can be a key point of difference when it comes to attracting drinkers looking for flavour novelty.

“What makes Boski stand out is definitely the fact that we’re wine-based,” Boski’s Marine Gargadennec said.

“We’re aiming to put on the market a new product that breaks the codes.”

For Boski’s RTDs, wine grapes are crushed and fermented as they would be in the ordinary production of wine. The wine is then processed to remove colour and flavour, before Boski introduces natural flavours and colours.

“Watermelon, pineapple and raspberry are the flavours that have gotten most of the love so far,” Gargadennec told National Liquor News.

Part Time Rangers is also seeing success with its berry-based flavours, as Wheeler said: “Out of the three Part Time Rangers delicious bevs, the Pink Rhino with gin, raspberry and sparkling water is the favourite amongst the Rangers so far. This drink taps into the growing gin trend and berry flavour trends.”

Ampersand Projects and Vodka Cruiser are also looking to shake up their flavour portfolio as they seek to capture new customers.

“Our limited edition [products] continue to surprise and delight shoppers – we’ve seen amazing response to limited runs of our Originals with Blueberry & Pom Pom, as well as our Sours with Sour Grape & Sour Strawberry,” Ritoli said.

Meanwhile, Ampersand Projects has expanded its flavoured offering, having made its name with decidedly simpler expressions.

Bottomley said: “Some of the fastest growth is coming from our flavoured RTDs, in particular Vodka Soda & Pine Lime. This is a unique flavour profile that is a twist on the classic splice ice-cream.”

Ritoli, speaking from considerable experience, does sound one note of caution, and expects the RTD category to consolidate flavour offerings in the not-too-distant future.

“The number of SKUs in RTDs has doubled over the last five years, and while it can give shoppers a reason to try something new, there will be a lot of bets placed while retailers and manufacturers sift through the NPDs to find ones that really stick and drive the category forward,” he said.

Canned classics

Several of the brands that National Liquor News spoke to for this story pointed to the development of canned cocktails as a growing trend in the RTD market.

With the pandemic closing the onpremisefor months at a time, drinkershave sought convenient ways to replicate themixed drinks they had previously enjoyedin bars in the ‘at-home occasion’.

Bottomley described canned cocktailsas a new but emerging subcategory,and picked it as a trend to watch over thenext year.

“Cocktail RTDs will become part of the RTD drinker’s repertoire in 2022,” he said.

“Lighter and carbonated versions of classic cocktails such as Margaritas willbe popular.”

Indeed, Jose Cuervo launched a sparkling margarita in a can just last year, while Saintly has also introduced its iZZ!range of canned cocktails more recently, with the likes of Watermelon Margarita and Passionfruit Mojito SKUs launching this month.

Barton said that the iZZ! range will tap into a global trend for canned cocktails, with growth in the US reaching +86 percent last year.

“Convenience has always been the driving force behind canned cocktails, but now consumers are looking for more,” he said.

“They are looking for lighter, more accessible cocktails that don’t compromise on the experience.”

Spirited expansions

An interesting development in the RTD market has been release of full size bottled formats of the spirit bases used in the RTD products themselves.

Ampersand Projects, for example, has produced full bottles of the gin and vodka used in its products, complete with the company’s hallmark minimalist labelling.

“Vodka is proving to be the most popular spirit forus,” Bottomley said.

Saintly has done something similar, but in a slightly different space, launching a range of ‘Hard Seltzer Spirits’this month. This product contains everything a consumer needs to recreate Saintly canned seltzers at home – just add soda.

“Saintly Spirits have been developed to serve as a seltzer when mixed with soda, for taste flexibility at home and reducing the need for packaged fridge space or taps in the on-premise,” Barton explained.

“Saintly Spirits is versatile and can also be used in unique cocktail creation, both in the bar and at home.”