They’re called ready-to-drink cocktails—and they are everywhere. RTDs, as they are known in the beverage industry, are so popular that many retailers say they now consider them the fourth sector in alcohol sales, along with the big three legacy choices of beer, wine, and spirits.
After a hard cola RTD from Bud Light won Best of Show in a blind taste test of four judges for the Minnesota Monthly GrillFest event in May, we asked several Twin Cities experts in the beverage industry their thoughts on the trend. They include Billy Johnson, regional category manager for Johnson Brothers, a national liquor distributor founded in 1953 and headquartered in St. Paul; Anissa Gurstel, category manager of wines and spirits at Lunds & Byerlys; and Lee Monskey, manager of Haskell’s Minnetonka store.
Here are their answers, edited for length and clarity.
What trends have you been seeing in the beverage industry related to Ready to Drink beverages?
Johnson: RTD beverages have seen tremendous growth over the past couple years. Per syndicated retail sales data in Minnesota, they were up 46% over the past 52 weeks in a spirits category that was flat [because of] COVID-19. And the hottest subsection within RTDs is canned cocktails, which are up 112% after posting a 186% jump the previous year!
Gurstel: We are seeing great sales growth, with fun, new flavors being produced almost weekly.
Monskey: In the industry we call them RTDs, [but] consumers usually refer to them as pre-mixed cocktails. This category has expanded greatly in the last few years and even more so in the last few months. Large liquor brands have recently entered the ring. Bacardi Rum, Bombay Gin, Ketel One Vodka, Malibu Rum, Tanqueray Gin are a few recent entrants.
Which brands or items have been the most popular?
Johnson: Spirit-based seltzers that mimic their malt-based counterparts have been the top-selling RTDs, led by High Noon. They entered the category at the perfect time as malt-based seltzers started to plateau. Customers were looking for something new and more premium to try, and they knocked it out of the park by using real vodka and real juice. From there we are seeing all different kinds of cocktails people would normally order at bars and restaurants. like margaritas, Old Fashioneds, mules, and more.
Gurstel: The fresh new flavors always seem to be on top! This year we’re seeing passionfruit, watermelon, peach, and new seasonal variety packs from many of the main producers. Some of the first products out of the gate were entirely new, or new to this type of beverage. Now we are seeing some of the traditional distillers come out with vibrant and fun, innovative items.
Monskey: It will be interesting to see how the big-name brands fare this year. So far, the big winners at Haskell’s have been smaller brands like Two Chicks and a Minnesota producer named Vikre.
Are there any flavor combos that surprise you?
Johnson: Joia has had success with their Greyhound and Cosmopolitan canned cocktails. And Gray Duck recently launched Quacky Taffy, which is a banana taffy-flavored seltzer available in their Quack Pack variety pack. But we’re in the gold rush period of this category, so we should see some unique combinations shortly.
Monskey: The biggest surprise to me is one from Duluth’s Vikre Distillery called “Frenchie.” It is a melange of rose wine, citrus juice, elderflower, and juniper. That can is hard to keep in stock. It is such a unique combination and quite complex for a canned beverage.
Why do you think RTDs are so popular right now?
Johnson: Like with online delivery services and remote working, I think the pandemic took a lot of trends that were already gaining traction and sped them up. People couldn’t go out to their favorite restaurants and bars, but they still wanted to have a cocktail like they normally would at those places. Now that people have tried them, they might be changing what they typically grab from their local store.
Gurstel: A lot of customers started experimenting with cocktails during the pandemic and realized they really enjoyed it. This is an extension of that, but with an added layer of ease and convenience. You can gather with friends, around a fire for instance, and still enjoy your favorite cocktail. It’s also an easy way to try something new without having to purchase a larger bottle of spirits or a multitude of mixers. Just last summer, my husband and I packed a cooler full of canned mixed cocktails for a weekend away with friends, and it was so fun to experiment and try new things.
Monskey: The modern consumer wants immediate gratification. The RTD format means that one will not have to spend the time mixing drinks for themselves or for a social gathering. It is an easy way to enjoy a cocktail without the hassle of sourcing the ingredients and creating the blends.
Do you think RTDs are a seasonal choice?
Johnson: There might be fluctuations in what type of cocktail is consumed during summer and winter, but the RTD category itself will only continue to grow with increased trial. This includes RTS (ready to serve serve) items such as Kinky and Jose Cuervo.
Monskey: They seem to sell all year. It will be interesting to see how the traditional warm weather drinks like gin and tonics sell in the depths of Minnesota’s winter next year. My guess is that the Bombay Sapphire and Tanqueray RTDs will lay dormant for a few months.
Are hard seltzers considered RTDs?
Johnson: Historically, we have separated the three big categories (wine, spirits, beer) by base. However, we’re starting to see retailers and on-premise customers treat this as a new fourth category, essentially combining RTDs and seltzers regardless of base. Within RTDs and seltzers, you have three distinct sub-categories: hard seltzers (carbonated water and alcohol), premixed cocktails (cocktails that are premixed and ready to drink or ready to serve), and flavored malt beverages. These items historically have been in three different parts of the store because of base, but because of the customer affinity between them, we think it makes more sense to consolidate them into a new fourth section.
Monskey: Hard seltzers are a separate category. The popularity of these beverages are strong but RTDs, which are liquor based, not beer based, will definitely cut into the sales of those brands.
Are RTDs “replacing” other beverages, or are all sectors increasing?
Johnson: RTDs and seltzers are following some of the larger macro trends we see in terms of “better for you” and wellness [selections]. With that being said, we have seen the largest share shift away from domestic premium and below-premium beer segments per syndicated data. There’s also a large section of people that want something that tastes good or natural. And that’s the other reason spirit-based RTDs have gained so much traction.
Gurstel: We are seeing them as additional sales, not necessarily taking from any one sector. Whereas, when hard seltzers first started exploding in popularity, those sales certainly came from other sectors. Now we are seeing sectors level off, with the canned cocktails being an add-on purchase, not instead of something else.
Monskey: RTDs have not yet cut into the sales of liquor, which is a very strong category currently. I believe that RTDs will cut into seltzer sales. Seltzers cut into beer sales [as well as] rose wine sales. I will be curious to see the continued flood of new products as well [and] which will remain in the marketplace.