Leading global beverage alcohol data and insights analysts, IWSR is predicting RTD volumes in top global markets, including Australia, will continue to enjoy fast growth, with total market share to increase from four per cent in 2020, to eight per cent by 2025.
IWSR forecasts an approximate 15 per cent compound annual growth rate (CAGR) from 2020 to 2025 for RTDs across 10 focus markets, compared to about one per cent CAGR for total beverage alcohol during that same period.
The 10 focus markets of Australia, Brazil, Canada, China, Germany, Japan, Mexico, South Africa, UK, and US represent more than 85 per cent of all RTD volumes worldwide.
“RTDs are still growing at higher rates than spirits, wine, and beer, signalling a major shift in consumer interest in this category across all demographics,” says Brandy Rand, COO of the Americas at IWSR Drinks Market Analysis.
“But it’s important to note that RTDs aren’t only stealing share from beer, they’re also attracting spirits consumers in markets such as Australia and the UK, and cider drinkers in South Africa. We’re also seeing a significant premiumisation trend in RTDs as more and more new brands enter the space.”
Not surprisingly hard seltzers are leading the charge, with IWSR projecting the sector will account for half of all global volumes by 2025, up from 30 per cent in 2020. Although much of this growth will come from the US, the forecast for Australia is 24 per cent CAGR 2020-2025. Across the 10 focus markets in the study, hard seltzers are expected to post total volume growth of 26 per cent CAGR 2020-2025.
Rand added: “Hard seltzer volumes outside the US are small, but awareness is also low. As that awareness grows, we’re seeing that people are increasingly willing to consider trying these products.
“It’s important to remember that it took a few years for hard seltzers to catch on in America, and we’re still in early days in this category outside the US.”
Another sector expected to see strong growth in Australia is cocktails/long drinks, which IWSR predicts to grow by almost nine per cent CAGR 2020-2025. Other rapidly growing RTD sectors include hard coffees, hard kombuchas, and hard teas (though from a smaller base).
IWSR consumer research shows that more than half of RTD drinkers (56%) say that the regular release of new RTD flavours is the most important factor in establishing a premium image, followed by connection to a known brand (the value of brand extensions), and the use of innovative packaging.
IWSR research also shows that there is a clear preference among consumers for spirit-based RTDs in most markets, as these generally have connotations of superior quality (vodka in particular is highly favoured as a base), though malt-based products are gaining share as well, driven of course by the rise of hard seltzers.
RTDs have proven to be an effective opportunity for companies and brands from across the full spectrum of the drinks market. For example, brewers and soft drink companies have found particular opportunities in hard seltzers. Spirits and wine producers too have leveraged their existing brand awareness and equity to move into RTDs, from pre-mixed cocktails to hard seltzers to wine spritzes and coolers.
“It’s not just consumers who benefit from interesting and innovative RTD products, so too do global drinks companies. More than any other category, RTDs have truly captured and leveraged the trend of convergence in the beverage industry,” said Rand.
“Many well-known brands, from water to energy drinks to coffee, have recently crossed over into alcoholic RTDs, leading to a number of strategic partnerships between soft drinks, beer, and spirits companies in order to successfully leverage distribution across multiple outlets.”