BevAlc Insights’ 2022 RTD Cocktail Forecast
Ready-to-drink cocktails are poised for strong growth, driven by flavor innovation and a shift away from hard seltzer
Few other categories saw more stratospheric growth during Covid-19 lockdowns than ready-to-drink (RTD) cocktails, driven by consumers’ desire for high-quality, easy-to-enjoy, highly portable cocktails.
But as consumers have returned to restaurants and bars, demand for RTD cocktails hasn’t waned; in fact, it has continued to grow rapidly. With even more brands and SKUs on the market, as demand for hard seltzer begins to level off, RTDs are poised to have a bright future.
Inside the RTD Boom
After a banner year in 2020, RTD sales held strong in 2021 with triple-digit growth. According to NielsenIQ, year-over-year off-premise dollar sales increased 156 percent for spirits-based hard seltzers for the 52-week period ending October 2, 2021, and sales for RTD cocktails grew 126 percent. According to IRI, premixed cocktails and spirits-based seltzers accounted for just over $1 billion in off-premise sales over the 52 weeks ending November 28, 2021.
Though the RTD cocktail category was already growing, the onset of Covid-19 set the RTD cocktail category on fire. When restaurants and bars shuttered in March 2020, consumers brought on-premise cocktail culture home. While this resulted in a purchasing uptick in the ingredients to recreate their favorite restaurant cocktails, it was also a boon for canned, single-serve RTDs.
“Canned cocktails are a convenient and quality solution for cocktail lovers,” says Earl Kight, the co-founder and chief sales and marketing officer for Cutwater Spirits. “No ingredients, no prep or clean-up. They offer controlled ABVs and consistently taste delicious.”
RTD cocktails were also seen as safer alternatives amidst pandemic health concerns. Like other canned beverages, the single-serve format reduces potential contact points (such as shared glassware or bottles) and offers glass-free portability for outdoor gatherings. “They are great for people who are willing to socialize [but want to] minimize contact by doing so outdoors,” says Jill Burns, a co-founder of Austin Cocktails.
Without the recent evolution of RTD cocktails, though, it’s unlikely that the category would have benefited from these new consumer purchasing preferences. Today’s RTD cocktails have come a long way from decades-old predecessors like wine coolers and malt-based hard lemonades.
“The RTD category has grown from less expensive offerings made with artificial ingredients and neon colors to cocktails made with natural flavors and premium spirits,” says Kelly Gasink, the other co-founder of Austin Cocktails. While RTDs can range from full-strength cocktails, like Austin Cocktails’ cans, to lower-ABV options that can compete with hard seltzers, premiumization has resulted in a new wave of products that boast less sugar and more ingredient transparency.
“RTDs have evolved from basic, low-ABV drinks to true, high-proof cocktails,” says Mollie Cook, the director of marketing for Molly’s Spirits in Denver. “In the past, all that was readily available was usually-too-sugary margarita mix. Now, we see a massive variety that encompasses everyone’s tastes.” The wide variety also allows consumers to experiment with new types of cocktails without purchasing the ingredients needed to make them at home, she says.
According to NielsenIQ, vodka-based drinks accounted for more than half of the category’s off-premise dollar sales for the 52-week period ending October 2, 2021, increasing 110 percent over the previous year. Tequila-based RTDs saw the highest growth at 138 percent, followed by rum-based drinks at 132 percent.
While the RTD cocktail category remains small on Drizly, it has made significant gains over previous years. In 2021, RTDs accounted for a nearly 2 percent share of total sales — up from 1.1 percent in 2020 and just 0.4 percent in 2019.
Which Brands and SKUs are Selling?
The increased number and variety of RTD options on the market has fueled the category’s growth, which has inspired even more brands to launch RTD products. As of 2021 year-to-date, there are over 450 RTD brands on Drizly — a 45 percent increase over the previous year, and a whopping 170 percent increase over 2019.
Despite the plethora of offerings, however, one brand — High Noon— continues to dominate the category. The brand has held the No. 1 position on Drizly’s list of top-selling RTD brands for two years running, and in 2021, it commanded seven of the top 10 spots among the category’s top-selling SKUs.
Much of the brand’s success has been driven by the positioning of High Noon’s drinks within the hard seltzer category; though High Noon is vodka-based, therefore categorizing it as a RTD cocktail, it is marketed as a vodka-based hard seltzer. “This has allowed the brand to capture share of hard seltzer buyers,” says Liz Paquette, Drizly’s head of consumer insights, “and carry over into the RTD category.”
Drizly’s Top-Selling RTD Brands, 2021
- High Noon
- Cutwater Spirits
- On The Rocks
- Jose Cuervo
- 1800 Tequila
- The Long Drink Company
- Fisher’s Island
Drizly’s Top-Selling RTD SKUs, 2021
- High Noon Hard Seltzer Variety Pack
- High Noon Tropical Variety Pack
- High Noon Peach Hard Seltzer
- Cutwater Tequila Margarita
- High Noon Pineapple Hard Seltzer
- Skinnygirl Margarita
- High Noon Watermelon Hard Seltzer
- High Noon Grapefruit Hard Seltzer
- High Noon Lime Hard Seltzer
- On The Rocks Effen Cosmopolitan Cocktail
Despite the dominance of High Noon, Cutwater made serious gains within the RTD category in 2021, with its best-selling Cutwater Tequila Margarita rising from No. 9 to No. 4 on Drizly’s top-selling SKUs list. This underscores flavor trends within the category; other than light, fresh, hard seltzer-like RTDs, margarita RTDs lead flavor offerings, with Cutwater, Skinnygirl, and On The Rocks in leading positions.
This trend comes as no surprise to Cynthia Gomez, the vice president of marketing at Don Sebastiani & Sons, producer of Flybird margarita cocktails. “Historically, margaritas have claimed the No. 1 spot as the top-selling drink on-premise in the United States,” she says, “and tequila has been one of the fastest-growing spirits in the last few years.”
At 68 percent of share, canned formats comprise the majority of Drizly’s RTD SKUs and brands, underscoring the category’s shift from bottles to cans to meet consumer demand. “In early 2019 we saw the popularity of cans early,” says Burns of Austin Cocktails, “and knew we had to expand our offerings to single-serve cans.” Perhaps buoyed by the rise of hard seltzers, canned cocktails are now essential products for retailers to carry.
Drizly’s fastest-growing RTD brands are a mix of large, well-known producers — such as Hornitos and Ketel One — and lesser-known names like Dezo and Social Hour.
“I think we will continue to see lots of innovation in the RTD category from both start-up brands as well as existing brands looking to find a niche in the increasingly crowded market,” says Paquette. “However, as we saw with hard seltzer and as we have already begun to see in the RTD category with High Noon, Cutwater, and On the Rocks, there will likely be three or four brands that dominate sales nationwide.”
Drizly’s Fastest-Growing RTD Brands, 2021
- Social Hour Cocktails
- Dry Fly
- Dogfish Head
- Uptown Cocktails
- Costa Brava Cocktails
- Rancho Gloria
- Treaty Oak
- Ketel One Botanical
Who is Buying RTDs?
RTD purchasers on Drizly skew female, with women comprising 60 percent of buyers. Millennials hold the largest share of RTD purchases on Drizly (62 percent of share), followed by Gen X (23 percent). However, Gen Z significantly over-indexes on RTD cocktails compared to overall sales, holding nine percent of share. “The younger generations have seen the most share growth in this category over the past few years as it has evolved from primarily multi-serve margaritas to a wide array of single-serve cocktail flavors,” says Paquette.
Poised for Future Success
Despite representing a small share of overall sales on Drizly, the RTD category is one for retailers to invest in. The IWSR predicts that the RTD category will grow at an 11.5 percent compound annual rate between 2019 and 2024.
The RTD category not only has staying power, says Paquette, but its share will continue to increase. “It is still a very small piece of the total liquor category and about half the size of its hard seltzer counterpart,” she says, “so we believe there is still room for continued growth.”
She also predicts that consumer education will be a key driver for the RTD category. “Consumers will become savvier about what they are drinking,” she says, “from ingredients to attributes like organic and gluten-free.”
As hard seltzer growth begins to level off, RTD cocktails are likely to benefit in 2022. According to Drizly’s 2021 Retail Report, 60 percent of retailers surveyed plan to stock more RTD cocktails next year.
Gomez, too, dismisses the idea of RTDs as a pandemic-driven fad. “2020 may have accelerated the RTD cocktail category’s growth, but producers have been laying a foundation for this success for several years,” she says. “The RTD cocktail category’s potential to drive retail sales — now and in the future — is huge.”