RTDs: beyond the sweet spot
The clocks have gone forward, the sun is battling its way through the clouds and the season of barbecues, festivals and picnics is almost upon us. Drinks retailers are urged to stock up on RTDs to boost sales and margins ahead of this crucial trading period.
The category is extremely buoyant right now, outperforming beer, wine, cider and spirits after enjoying 8% off-trade growth in 2018 (Nielsen). Stalwarts such as Global Brands are still the leading lights within RTDs, but spirits producers have massively ramped up their focus on the category in recent years.
Bacardi Brown-Forman Brands reports surging sales of its Jack Daniel’s pre-mixed cans, which have shot up by £1.9 million in value over the past year (Nielsen). Diageo is also channelling a lot of energy into RTDs and Gordon’s pink gin was the most successful canned pre-mix launch in 2018, now worth £10.4 million.
Now major wine suppliers are trying to capitalise on the growth, with both Treasury Wine Estates and Gallo highlighting it as a significant opportunity. RTDs are really resonating with consumers right now and the summer should see a further sales spike if retailers continue to champion it. “It is essential for retailers to stock up on RTDs to capitalise on the warmer weather drinking trends,” says Jen Draper, marketing director at Global Brands, which reported 19.5% sales growth in 2018, with turnover topping £50 million for the first time. “RTDs are perfect sunshine drinks, their grab- and-go nature makes them perfect for festivals, garden parties, barbecues and more.
“Once thought to contain just blue, sugary liquids, the RTD category is seeing a resurgence and is now the fastest-growing sector in off- trade BWS. An influx of on-trend innovation has seen new brands and SKUs frequent the shelves, transforming the category into a place for experimentation, giving consumers access to a wide range of experiences which have historically been confined to the on-trade.
“Global Brands has worked tirelessly to drive this growth – a focus that has seen our portfolio go from strength to strength and add £2.6 million to the category in the past 12 months [Nielsen].”
Cans are driving growth in this category, mirroring the trend seen in beer. Nielsen figures show that cans now account for 62% of category volume in the multiple grocers, after enjoying 27% sales growth over the past year. Cans are also catching up with bottles in the convenience channel, now accounting for 46% of the category after growing 34% in the past year.
“In recent years, the RTD category has grown significantly and this has been driven by innovation from big brands, such as Jack Daniel’s,” says Matt Knight, off-trade channel manager at BBFB. “Despite being originally known as cheap and sugary alternatives to beers and ciders, brands are now catering to different needs and introducing low-calorie options, such as Jack Daniel’s & Light Cola. Within the past 10 years, more than 30 new variations have entered the RTD category, contributing to an overall increase in volume and growth.
“As we get closer to the summer, spirit drinkers will be looking for refreshing drinks and many brands have created entire ranges of RTDs based on their signature serves. For us that’s our signature Jack & Cola, and for people wanting a lighter drink, the Jack Daniel’s Tennessee Honey & Lemonade. As younger drinkers consume less alcohol than previous generations, RTDs are perfect products for them to try different types of alcohol without the commitment to a full spirits bottle. For us, the UK is the fifth most popular market for sales globally, indicating that consumer demand for this type of convenient drink is popular and has the potential for growth.”
The wine trade is now taking cans very seriously as it bids to reignite a category that has stagnated in recent years. “Blossom Hill Spritz has seen 70% growth and it’s been so successful that we’ve extended it into cans,” says Kirstie McCosh, European marketing director at TWE. “Since the launch 18 months ago, we have sold more than 100,000 units. If you think of RTDs growing so strongly, being present in these areas is hugely important in that on-the-go format.”
Mark Stammers, channel director at Gallo, adds: “Smaller-format wines are currently a growing trend due to consumer efforts in moderating their alcohol consumption. Barefoot’s 18.7cl range offers the chance to enjoy varieties such as Pinot Grigio and Merlot but in a smaller, more manageable format. As consumers are more readily purchasing for the same night as opposed to doing a weekly shop, we expect 18.7cl items to play an increasingly important role in the wine category. Impulse shoppers are easily targeted with enticing offers and eye-catching merchandising. An impromptu picnic in the park is the perfect time to attract new customers. Retailers must make sure that the range is in the chillers, so they are ready for immediate consumption, as well as located near to single-serve items such as RTD cans for ease.”
Global Brands has pioneered a raft of innovation in recent years, and its All Shook Up brand is now worth £1.7 million in retail sales just 10 months after launch. Yet traditional RTDs are also enjoying strong growth: VK sales are up 15% in value, driven by Blue and Orange & Passion Fruit, suggesting many consumers still enjoy sweet, refreshing drinks. It also says sales of Hooch spike in the summer.
But it has the health-conscious consumers covered too. “Crooked Beverage Co fits the market well at only 47 calories per 10cl and containing all-natural ingredients,” says Draper. “Also lower in sugar than popular fruit ciders, Crooked contains less than 5g per 10cl, catering to the rising 55% of consumers who say they are worried about their sugar intake. Having been Vegan Society accredited, Crooked appeals to the 3.5 million people practising a plant-based diet, which is set to reach new heights in 2019.”