Everybody’s talking about RTDs, and for good reason. The ready-to-drink (RTD) beverage alcohol segment is absolutely exploding, with that growth triggering a slew of new brands and products entering the market.
But as this avalanche of RTDs continues to hit shelves nationwide, the very definition of the category remains up for debate. Global data and analytics company Nielsen churns out detailed analytical reports on everything from television to retail, but even they can’t provide a universal definition.
So what gives? It covers a lot, of course, and with the pace of innovation, it’s crossing a lot of categories, from both alcohol and non-alcohol companies.
“There definitely is not one standard definition, and the definition varies across most of our clients,” says Danelle Kosmal, Nielsen’s vice president of Beverage Alcohol Practice. “The most common definition that we use for ready-to-drink alcohol products includes hard seltzers, single-serve ready-to-drink spirit cocktails, flavored malt beverages, hard tea, hard kombucha, wine-based cocktails, canned wine, and wine that comes in smaller non-glass packaging,” going on to say there are even new categories emerging from within the segment, like frozen products.
“This definition changes and is tweaked often, as new products come into the market, creating subsegments of ready-to-drink products that have never existed before,” Kosmal adds. “For example, hard lemonade seltzers, hard tea seltzers, and ranch water seltzers are three new subsegments of seltzers and RTD that we created this year.”
And then the label — “ready-to-drink” — itself is misleadingly broad. After all, technically, anything you can open and drink as-is is “ready to drink.” Ashley Campbell, brand manager for Tequila Cazadores, embraces this more expansive term — although maybe not for Cazadores’ core spirits offerings.
“Simply put, RTDs are single-serve beverages that are ready to be consumed immediately upon opening. They are perfect, easy drinks that can be enjoyed for any occasion, anywhere with family and friends,” Campbell says.
Morgan Robbat, president of the hard kombucha brand KYLA, agrees. “For us, ready-to-drink is any beverage that offers convenience in consumption – be it by uncapping a bottle or popping a can open,” says Robbat. “When the concept first originated, cocktails dominated the space, but as the industry expands with new innovations, so must the category. RTD for us is equivalent to ‘hassle-free’ and the liquid stands on its own when consumed as-is.”
The beverage alcohol industry does tend to primarily, or at least initially, refer to RTDs as spirits-based, pre-mixed, and often canned cocktails. But as Kosmal and Robbat point out, RTDs can also be malt-based or even include alternative alcohols like hard seltzer or kombucha, depending on who you ask.
As always, it’s important to consider the source. Nielsen categorizes hard seltzers as an RTD, but alcohol e-commerce platform Drizly nestles their hard seltzer offerings under “Specialty Beer & Alternatives.” Alcohol retailer BevMo, meanwhile, internally breaks down RTDs by base spirit; as explained by Beer & DSO Beverage category manager Amy Gutierrez.
“RTD for spirits in our system are called Prepared Cocktails, which include all flavors and sizes, under one class header,” Gutierrez says. “RTD for beer in our system are called Malt Beverages, which include all malt and seltzers, with sub descriptions, under the main class. RTD for wine in our system is under the varietal of the actual wine, with a sub description of single serve, whether a single can of wine or 12-pk or 4-pk package.” She goes on to say as the umbrella term “RTD” continues to evolve, BevMo is currently in the process of redefining these segments “to make it easier for the customer to shop on our website.” Essentially, their method of filtering between products is more driven by user experience on the site in order to make the purchasing process as easy as possible.
Liz Paquette, Head of Consumer Insights at Drizly, says they have a slightly narrower definition of what constitutes a ready-to-drink. “Drizly defines RTDs as pre-mixed drinks that have a liquor base. They are intended to be consumed directly and have a similar ABV to beer/ wine (typically below 40%),” according to Paquette. This is similar to Minibar’s online shopping and delivery platform, which also categorizes RTDs under “Liquor” while keeping products like hard seltzers and hard teas under the Beer category.
Piotr Jurjewicz, Chief Marketing Officer at FIFCO USA (a brewing conglomerate based in New York) takes a bit more of an esoteric approach when it comes to defining what RTDs actually are, explaining the category is driven by consumer demand for convenience and flavor above all other factors. “RTDs provide a consumer-centric experience that delivers the taste people want in a convenient package,” says Jurjewicz. “However, the most defining characteristics of RTDs are their combinations of features and benefits borrowed from different categories… Innovation in RTDs starts with an open view toward satisfying consumers’ needs and tastes preferences first and then delivering new product solutions that can be easily consumed.”
Despite analytic firms and retailers each defining the category in individual ways, some producers, like Elenita, feel RTDs are best characterized specifically as spirits-based.
“We think it’s important to define RTD as something that is spirit based – no malt, no filtered beer, no wine, no fermented cane sugar, no kombucha,” says Elenita co-founders Jordan Dil and Mikel Noriega. “This is important because it seems like a lot of consumers are confused or are unsure of what they are purchasing and consuming. We’re seeing that they drink brands thinking it is a vodka or tequila soda when they are actually drinking malted rice or sugar. The RTD category, by definition, should be higher quality than what we are seeing of the seltzer segment.”
Quality remains relatively subjective, but many RTD brands continue to promote a first-to-market position as a way to stand apart from competition, whether they are formally categorized as an RTD by everyone or not. “A big reason we approached a spirit as complex as mezcal was because we wanted to be the first” of the sparkling mezcal drinks, say Elenita’s founders. “[W]e looked at the RTD/seltzer space and realized the potential to create something just as pure, artisanal and elevated as a bottled mezcal in this exciting emerging space that attracted a lot of loyalty and attention in an exciting and growing consumer segment.” KYLA’s Robbat agrees, explaining that their “Riviera Series” of brewed cocktails, which don’t have a kombucha base, is currently the sole probiotic-based RTD cocktail product on the market. Their motivation for launching the new line was to capture the health conscious consumer with a “better for you” beverage that still mimics a traditional cocktail.
With beverage alcohol trend firm IWSR reporting a 43% increase in global consumption of RTDs in 2020, as well as predicting 20+% growth YoY through 2024, it’s fair to say RTDs are probably going to continue to exist in a bit of a squishy space, especially now that consumers have had a taste of the cocktail experience at home. Direct-to-consumer sales of RTDs, like most alcohol segments, increased dramatically during COVID-19’s extended shutdowns, and the ability to marry familiar flavors with a safe, off-premise experience provided a convenient way to have your highball and drink it too. Some large beverage alcohol companies, like Jim Beam, decided to join the party once they saw how much demand existed, launching a line of canned Highball cocktails designed to appeal to both existing bourbon fans as well as those new to the spirit.
Still, without a formally agreed upon definition across the industry, this mix of “traditional” spirits-based canned cocktails are likely to continue to coexist next to malt-based and other alternative alcohols promoting themselves all as ready-to-drinks, as consumers seek convenience and flavor over base alcohol.
Even as previously ironclad definitions differentiating between beverage alcohol segments continue to evolve, Robbat predicts that RTDs will maintain their trajectory. “This segment will continue to grow as consumers continue to prioritize convenience and products they can take on the go, and the offerings continue to get better,” she says. In short, despite disagreement on what “ready-to-drink” really means, it’s likely we’ll see more products branded as such in the future.