The RTD alcohol category has seen volume growth of 43% globally this year, according to figures from IWSR: all the more impressive when plotted against a 8% decline in global alcohol.
Brown-Forman’s RTD alcohol portfolio features two products under its power brand Jack Daniel’s: its 7% ABV RTD can cocktails (whiskey & cola; whiskey & seltzer; and honey whiskey & lemonade); and Jack Daniel’s Country Cocktails – a 4.8% ABV brand packaged in glass bottles.
Brown-Forman also produces tequila-based New Mix RTD, which is available in Canada and Mexico.
And in October, it acquired Part Time Rangers: a New Zealand company founded in 2018 to produce spirit-based RTDs.
Lawson Whiting, president and CEO of Brown-Forman, said the company has been taken by surprise by the ‘exceptional growth’ in its RTD business this year.
“We have believed in the ready-to-drink category ever since we launched our first Jack Daniel’s RTD over 25 years ago,” he said, speaking in the company's H1 earnings call this week.
“But, I'll admit that this year's performance has exceeded our expectations about the format and the category.
"And this really is not a single brand or single market phenomenon. We've seen strong growth from our Jack Daniel's RTDs in markets like Australia, Germany and the UK. Our recent launch of the Jack Daniel's spirit-based RTDs in the US is off to a terrific start.
"We've also seen excellent performance from our malt-based Jack Daniel's country cocktails in the US. Our tequila-based RTDs, called New Mix in Mexico, is now near a record 8 million cases in the last 12 months.”
Part Time Rangers acquistion
Part Time Rangers was founded just two years ago in New Zealand: set up by two 20-something-year-old brothers looking for an alternative to sugary premixed drinks.
The 6% ABV drinks use natural fruit flavors and donates 10% of profits to animal conservation initiatives. It currently offers a range of six RTD flavors: lime vodka; passionfruit apple vodka; apple lime rum; strawberry raspberry gin, ginger lime whiskey, and apple lemon gin.
Brown-Forman says the brand – acquired in October for an undisclosed sum - will help it grow in Australasia: but also sees potential for the RTDs to expand elsewhere.
“This brand was found by two brothers in New Zealand and offers white spirit-based cocktails in a convenient format,” said Whiting.
“We believe this brand can help diversify our RTD offerings in this region, as well as broaden our reach into the fast-growing white spirit RTD segment. This brand has done very well with a new generation of consumers, and we believe it’s well-positioned to take advantage of recent consumer trends such as lower calorie, lighter and brighter tasting.
"Part Time Rangers is also known for its focus on wildlife conservation and sustainability, particularly through its charitable donations supporting conservation and ecosystem preservation.
“While focused on New Zealand and Australia over the next 12 months, we believe this brand has the potential to move into more markets in upcoming years.”
Short term trend or long term potential?
But is the growth of RTDs a knee-jerk reaction to coronavirus – offering a convenient way to buy drinks and cocktails and consume them at home – or does it have legs for the longer term?
Whiting says the category is built on more than short-term trends: pointing to overarching consumer demands that RTDs can meet.
“Although the shutdown of the on-premise certainly gave a boost to the RTD category, the mega trends of convenience and flavors give us confidence that this category will continue to be a growth driver into the future.
“You’re not going to be seeing the triple digit growth rates that we’ve seen in some places [in the future], but we feel pretty good that it’s going to stay.”
RTDs set to overtake spirits by end of 2020 in the US
The RTD alcohol sector is the only alcohol category expected to see volume growth this year: but this growth is impressive with volumes expected to rise 43%, according to figures from IWSR. Its success is largely being driven by strong performance in the US, which is the largest RTD market in the world by volume.
"Global consumers have shown a propensity for refreshing, flavourful and longer-to-consume drinks, which bodes well for RTDs," notes IWSR. "The category is also well suited to the off-premise, which further boosted its popularity during lockdowns. RTDs are expected to post volume gains of 21.8% CAGR 2019-2024, stealing share primarily from the beer category.
"In the US, the RTD category will be bigger by volume than the spirits category by the end of this year."