During a recent US market study tour, the team behind Australian seltzer brand Hard Fizz visited a range of key retail outlets and met with industry stakeholders to gain a deeper understanding of the evolving market for RTDs.
In the Hard Fizz US RTD Study Tour report, the brand identifies the trends shaping the dominant RTD category across stand-alone liquor stores, convenience channels and supermarkets in the US.
Hard Fizz CEO, Wade Tiller, who was on the study tour, says the US is generally a year or two ahead of Australia with alcohol beverage trends.
“The US is the trendsetter with alcohol – what they do, the world generally follows, so if their market is loving tequila at the moment, you can assume it’s on its way here too.
“At Hard Fizz, we always innovate with purpose so the insights we gained from this trip will dictate what blends and flavours we put out in the coming years.
“Watch this space,” he added.
Trending formats and retail activations
Exploring the most popular packaging formats, the study found that 12-packs were consistently the leading format across key retailers, with 24-packs also present and appealing to bulk buyers.
Suited to sustained demand for convenience, the Hard Fizz team noted that ‘mega cans’ of 710ml with resealable lids were also present in the US, posing an opportunity for the Australian RTD market.
Other observations of emerging promotions and retail activations in the US include:
- Cross-category bundling is gaining traction, and while this already works well with snack pairings, retailers are beginning to explore spirits and RTD bundles.
- Liquor retailers are focused on in-store activations that offer instant prizes – using digital entries presents an opportunity to capture valuable first party data.
- There is increased emphasis on storefront and floor display promotions, with merchandising units evolving to include dedicated RTD chillers and cross-merchandising in high-traffic zones.
- Bundling promotions are effective, with multi-buy promotions such as two-for offers proving most popular.
- For more advanced price point bundling, retailers are grouping different pack sizes with tiered discounts.
- Drive-thru liquor retail is much less prominent in the US, meaning petrol and convenience stores focus on providing grab-and-go formats such as cold single cans and four-packs to increase impulse purchases and satisfy demands for convenience.
Sustained growth for better-for-you beverages
In the report, Hard Fizz identifies better-for-you RTDs as key growth drivers in the US liquor retail landscape, as is starting to emerge in Australia.
The report outlines zero- and low-sugar RTDs as being major differentiators, with US liquor retailers expanding shelf space for these offerings to cater to demand from health-conscious consumers. According to US liquor retailers, brands with better-for-you positioning are outperforming traditional sugary RTDs, with consumers showing a particular interest in juice-based RTDs.
As is already occurring in Australia, higher-ABV RTDs are also driving growth in the US RTD market, satisfying the trend of ‘drinking less but better’, with ultra-high ABV (above 10 per cent) beginning to gain traction.
Much like Australia, Gen Z is leading this trend in the US as the lower-alcohol consuming generation, making them a key demographic for better-for-you beverages.
Although it isn’t centred around alcoholic beverages, the Hard Fizz team also attended the Natural Products Expo West, which reinforced significant demand for health-conscious options and showcased the significant opportunities that exist in natural products and healthier alternatives.
Interestingly, the team also observed the impact of the legalisation of cannabis-infused food and beverages on the alcohol market. The report states: “CBD Products are certainly sourcing from alcohol consumption. With government endorsement there is a new industry with a lot of brand investment and engaging retail experiences.”
Tequila outpaces vodka
Within the US market, the report identifies clear trends for base alcohol, with tequila-based beverages dominating. While vodka-based RTDs still hold a significant share of the RTD market, growth is much slower than tequila.
“Tequila-based RTDs are surging, outpacing vodka in terms of growth [in the US]. Retailers see this as the next big wave,” the report says. “Vodka RTDs remain strong [in the US], holding a significant share, but growth is slower compared to tequila.”
Within the vodka and tequila segments, the report by Hard Fizz pinpointed pineapple as being the flavour of choice for many American RTD drinkers. Examples include Cutwater Pineapple Margarita, Hella Cocktail Co Pineapple Margarita and Vide Pineapple Tequila Soda.
Within this segment, strong consumer demand for citrus and tropical fruit flavours has led to increased shelf space and premium positioning, making way for other trending flavours such as guava, passionfruit and coconut.
While dark spirit RTDs push to compete with the increasingly popular light RTD segment, whisk(e)y and bourbon spirit bases are proving popular in the US in seasonal and cocktail-style variants.
“In the next three to five years, expect continued tequila growth [in Australia], along with premium rum and whiskey-based RTDs making stronger inroads,” the report states.
Key retailer takeaways:
- With the market for vodka-based RTDs stabilising, tequila-based RTDs are the most promising growth area.
- Consumers are showing sustained interest in higher-ABV RTDs, driving the emergence of ultra-high and more premium variants.
- Brand collaborations are increasing in frequency and success, particularly in the tequila and whisk(e)y segments.
- In a crowded RTD market, seasonal and limited flavour profiles are capturing consumer interest.
- Premiumisation and better-for-you trends continue to influence purchasing behaviour.