The RTD market has not only grown significantly over the past few years, but evolved and mutated since the beginning of the pandemic in early 2020. The major spirits producers turned their attention from the on-trade to investing in canning lines and bottling plants in order to shift volumes while bars and restaurants lay dormant. At the other end of the spectrum, bars and their tenders were hand-delivering their bottled cocktails around local neighbourhoods in order to pay the bills. But in the post-apocalyptic landscape of RTDs, we’re seeing a blossoming of premium versions which are still high in demand despite bars reopening around the world.
According to a report by IWSR Drinks Market Analysis, consumer demand for premium RTDs will drive the category forward, with value growth outpacing volume at 8% vs 5% CAGR 2022-26. In the US, arguably the most significant and developed RTD market, consumers are looking for premium serves in convenient formats.
“Consumers in the US have grown accustomed to the convenience and variety offered by RTDs, which has increasingly led to people trading up to spirit-based cocktails,” says Brandy Rand, chief strategy officer at IWSR Drinks Market Analysis. “With the RTD category firmly established and competition at an all-time high, brand owners continue to focus on innovative products and brand extensions or partnerships to drive greater awareness and distribution. The RTD innovation which IWSR is tracking year on year clearly shows a rapid pace of product transformation to meet consumer demand. There is no single dominant type of RTD globally, which makes the category uniquely positioned to capitalise on local tastes and trends.”
Category challenges
Sticking Stateside, Livewire is a premium brand of spirit-based RTDs founded by bartender Aaron Polsky in 2020. The range consists of five canned cocktails and two bottled expressions and the combination of quality liquid and rock star imagery has made it one of the country’s most exciting labels. But, as Polsky tells Drinks International, the category comes with several challenges.
“I don’t know what it’s like to run a company outside a pandemic because we launched 10 days before the first lockdown,” says Polsky. “One of our biggest challenges, aside from cashflow, is the constant shift in lead times on raw materials. For example, if I’m planning on making something, six weeks in advance I’ll call a supplier who has a four-week lead time and suddenly they tell me it’s going to be 12 weeks. It was a similar situation with the can shortages which took place and at one point it took over a month just to get a plain cardboard box because everyone was ordering off Amazon.”
The artistic detailing of Livewire’s range lends itself to the on-trade, where Polsky says the brand does 40% of its sales.
“We’re consistently getting new accounts, which is nice, from hotel chains to theme parks,” adds Polsky. “We opened up with Disney World about six months ago and it has expanded its offering through us. It’s now in all but one or two of its hotels on site, which is amazing for us.”
As well as proving a hit with Mickey, the brand is now launching in Las Vegas hotel chain MGM which has around 12 sites at 3,000 rooms per hotel.
“With the hotels we do really well when we’re served in the poolside bar,” says Polsky. “I’d say we’ve been trained by our parents’ generation to be wary of minibar prices, but when we’re at the hotel pool our wallets are more likely to be opened. What works well is that consumers understand the drink’s styling and quality at the poolside, then they see it in the minibar and go for it again – ironically, it’ll be cheaper than at the pool. We actually have one hotel which gives our cans away as part of their hospitality and that’s great for our exposure. The on-trade really drives the off-trade.”
Right now there are staffing issues for seemingly every corner of the hospitality sector, but this plays to the strengths of Livewire.
“Over the past few years we’ve worked out which venues to target. We don’t really bother with restaurants or top-end cocktail bars, because what makes our canned drinks so convenient is that staff don’t need to be trained in order to serve them. That’s why we do so well in venues with a high turnover of staff – it’s not a slight on those hotels, it’s just that retaining staff is difficult so hotels and bars love the convenience of serving great drinks without needing to train people.”
While Polsky appears reserved on how far the brand can go, its rapid success in hotel chains, combined with some recent interest in Asia, could see a boom in demand very soon.
Further success
On the other side of the Atlantic Ocean is another bartender-led success story. In contrast to the high-energy graphics of Livewire is the clean, simple bottle design of Craft Cocktails in Dublin. The concept was born out of necessity in 2020 by Irish bar-owner Dave Mulligan, who took out a €100,000 loan to get the business going.
Fast forward to 2023 and there are more than 10 cocktails in the range, which are available in two bottle sizes, sell significant volumes online throughout the UK and are partnered with major delivery companies such as Uber Eats and Deliveroo. However for Mulligan, it was always important for other on-trade venues to take on his drinks.
“If they buy our products, a bar or restaurant only has to accommodate 12 bottles, not 40 or more and, with the staff situation critical and likely to get worse, having a prepared product makes complete sense,” Mulligan told The Irish Times.
“I put it up to my beverage director to develop a range of cocktail recipes that were stable and had a six-month shelf life and gave her about three weeks to turn it around, which she did. We spoke to close contacts in the industry, we called in favours and we didn’t tell anyone until we were ready to put the products out there. In a nutshell, we set out to create a brand that could transcend the current market challenges while creating jobs and diversifying our business for the future.”
Today the production of Craft Cocktails takes place in Cuckoo Lane – a venue next door to Mulligan’s Bar 1661 in Dublin, which acts as a part-time factory, laboratory, retail and event space, brand showroom and taste room, complete with a working bar station. The operation requires a whole new set of staff and is an unequivocal success spawned from an independent bar in the Irish capital.
As the major spirits brands turn their attention back to the reopened on-trade they’re leaving behind extra space for this new wave of premium, bartender-led brands.
As the IWSR research suggests, consumer demand for premium RTDs is only going in one direction and while the likes of Livewire and Craft Cocktails may seem like regional success stories so far, there’s potential for a few independent labels to hit the mainstream internationally.
