While the COVID-19 pandemic may have accelerated growth for ready-to-drink canned cocktails (RTDs) over the last two years, alcohol delivery platform Drizly said the segment is more than “a pandemic-driven fad” and has the potential to drive retail sales.
In its BevAlc Insights’ 2022 RTD Cocktail Forecast report, Drizly recapped RTDs growth in 2021 and offered predictions for the segment in the new year.
Last year, RTDs accounted for nearly 2% of Drizly’s total sales, growing from 1.1% in 2020 and 0.4% in 2019.
“Few other categories saw more stratospheric growth during COVID-19 lockdowns than RTD cocktails, driven by consumers’ desire for high-quality, easy-to-enjoy, highly portable cocktails,” Drizly wrote in the report. “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.”
There are now more than 450 RTD brands available through the platform – a +45% increase compared to 2020, and a +170% increase versus 2019.
“Despite the plethora of offerings, however, one brand – High Noon – continues to dominate the category,” the report continues. “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.”
Drizly credits High Noon’s success to its marketing within the hard seltzer segment, despite being a vodka-based beverage rather than a malt- or sugar-based hard seltzer.
“This has allowed the brand to capture share of hard seltzer buyers and carry over into the RTD category,” Liz Paquette, Drizly’s head of consumer insights, said in the report.
Vodka-based RTDs accounted for more than half of the segment’s off-premise dollar sales for the 52-week period ending October 2, 2021, increasing +110% year-over-year, according to Drizly, citing NielsenIQ data. Tequila-based RTDs recorded the largest year-over-year growth in the segment (+138%), followed by rum-based (+132%) offerings.
After High Noon, the top 10 RTD brands on Drizly by dollar sales include (in order): Anheuser-Busch-owned Cutwater Spirits, On the Rocks, Jose Cuervo, Skinnygirl, 1800 Tequila, Buzzballz, Bacardi, The Long Drink Company and Fisher’s Island.
High Noon claims seven of the top 10 RTD SKUs: Hard Seltzer Variety Pack (No. 1), Tropical Variety Pack (No. 2), Peach Hard Seltzer (No. 3), Pineapple Hard Seltzer (No. 5), Watermelon Hard Seltzer (No. 7), Grapefruit Hard Seltzer (No. 8) and Lime Hard Seltzer (No. 9). Other SKUs making the list include Cutwater Tequila Margarita (No. 4), Skinnygirl Margarita (No. 6) and On the Rocks Effen Cosmopolitan Cocktail (No. 10).
Cutwater Tequila Margarita grew from No. 9 in 2020 to No. 4 in 2021, in-line with margarita-inspired flavor trends that Drizly said lead in RTD flavor offerings on the platform after “light, fresh, hard seltzer-like RTDs.”
“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,” Paquette said. “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.
“[RTDs are] still a very small piece of the total liquor category and about half the size of its hard seltzer counterpart, so we believe there is still room for continued growth,” she continued.
Drizly’s fastest-growing RTD brands for 2021 include (in order): Social Hour Cocktails, Dry Fly, Dogfish Head (Boston Beer Company), Hornitos, Uptown Cocktails, Dezo, Costa Brava Cocktails, Rancho Gloria, Treaty Oak and Ketel One Botanical.
Paquette said a key factor in continued RTD growth is consumer education on what RTDs are and what they are looking for from the segment.
“Consumers will become savvier about what they are drinking, from ingredients to attributes like organic and gluten-free,” she said.
According to Drizly’s 2021 Retail Report, 60% of retailers surveyed plan to stock more RTD cocktails in 2022.
Women account for 60% of RTD buyers on the platform, according to Drizly. Millennials (62%) have the largest share of RTD purchases over other generations, followed by Generation X (23%). However, Drizly noted that Generation Z (9%) over-indexes on RTDs compared to overall sales.