Behind the Bar

Let’s talk RTDs

Catching the wave of readyto-drink products.

BY MAURA KELLER

The ready-to-drink (RTD) segment has seen significant growth each year with new entrants and innovations. This is due in part to a new wave of consumers seeking convenient alternatives to fit their active and busy lifestyles, as well as the impact COVID-19 has had on consumers’ focus on to-go products. As a result, the quality of RTD products is increasing and more companies, including small-batch distilleries, are creating premium products that keep consumers coming back for more. principal at foodservice consultant Technomic, where she leads the adult beverage and convenience store practices, RTDs were trending prior to the pandemic as suppliers sought to satisfy consumer demand for favorite drinks in portable packaging.

“This aligns with the ‘food and drink everywhere’ trend, wherein consumers want to be able to easily enjoy their favorites whether at the park, a concert, a backyard gathering, or a restaurant or bar,” says Hood Crecca.

Also, the popularity of craft beer in cans, the rise of malt-based drink options, and bottled cocktails cropping up in some of the more trend-forward

Cutwater Spirits offers 20 different canned cocktails and counting, across nearly every spirit base including tequila, vodka, rum, gin, and whiskey. ’Merican Mule (top) offers four main varieties of mules.

bars made consumers curious about, and receptive to, new packaging options.

Just over half of consumers that order cocktails to-go from restaurants report ordering RTD cocktails, according to Technomic’s “Alcohol To Go” study, completed late last year—a strong indicator that RTDs have a place in restaurants’ takeout and delivery programs.

“The RTD trend is also an extension of the ongoing cocktail trend—consumers are highly engaged with cocktails and appreciate the convenience of RTD formats,” says Hood Crecca.

Christopher Wirth and Camila Soriano, founders of Volley, a canned tequila seltzer made with clean ingredients, say that the RTD environment is very dynamic and fast paced right now. While the category has existed for a long time, it only recently caught mainstream momentum.

As Wirth explains, a big part of the rise is the convenience factor, which has been amplified by the pandemic. Not only is it convenient for home consumption, it also has minimal human touchpoints, thus reducing chances to get sick.

“The category is seeing a shift away from the overly sweet and artificial RTDs to a more premium offering with higher quality ingredients,” says Wirth.

Soriano adds that there is a significant amount of investment in marketing coming from the big spirit brands, which is driving awareness and accelerating consumer adoption with attractive new packaging and lower calorie offerings.

“Instead of brands just promoting their spirit and leaving the creativity up to the consumer or bartender, they are now providing the finished solution to the consumer, which allows the spirit brands to create brand loyalty at a much lower price point than buying a full spirit bottle,” says Soriano.

Dean Mahoney, CEO of ’Merican Mule, premium, Moscow Mule canned cocktails in a variety of flavors, says canned cocktails are authentic and true-to-recipe, making them a premium and simpler version of bartender-style cocktails.

“The real reason this canned cocktail segment took some time to get going is that true liquor-based products have a higher tax, which is passed on to the consumer,” says Mahoney. “Malt-based, ‘ready-to-drink’ products offer a more affordable alternative that emulates a cocktail—but there is no tricking the consumer when it comes to quality. Today, consumers are really willing to pay for the superior flavor and especially convenience.”

Yuseff Cherney, master distiller and co-founder of Cutwater Spirits, says they’ve been focusing on RTDs since they first started back when they were part of Ballast Point. “When Cutwater Spirits officially entered the market in 2017, most of the canned cocktails out there used mystery alcohol derived from a malt base or a sugar but was never distilled,” says Cherney. “We decided we could do it differently and set out to make real cocktails with our own distilled spirits and high-quality ingredients.”

Cutwater Spirits now offers 20 different canned cocktails and counting, across nearly every spirit base including tequila, vodka, rum, gin, and whiskey.

“The consumer doesn’t have to purchase a long list of ingredients or spend time on prep and clean-up. They also offer a controlled ABV and taste consistently delicious,” says Cherney. “While off-premise drives the majority of our canned cocktail business, we see a lot of opportunity for growth in the on-premise—especially as things open.”

On-Premise Benefits At its core, RTDs provide operational ease, speed of service, and the ability to offer on-trend and unique drinks in a convenient packaging. As Hood Crecca explains, RTDs can be particularly

helpful in supporting “alcohol to-go” programs—not only for the operational efficiency but also because the packaging can withstand transit. The challenges for operators include storage and handling, as well as pricing, given that these products are also available at retail.

Wirth says that bar owners are benefitting from the RTD boom because they finally have something worth serving to their customers that is close to what a bartender would make.

“There’s no replacing the skills of a seasoned bartender and the experience of watching the craftsmanship in making a beautiful cocktail, but in a time when bar owners and operators are surviving off of grab and go, RTDs have provided a perfect solution,” Wirth says.

Bartenders are able to pump out drinks at a faster pace with simple logistics as well—no glassware or any additional materials needed.

“It’s crucial for operators to identify the strategic role and business rational for offering RTD products for their specific concept,” says Hood Crecca. “That requires asking some key questions, including: Are RTDs a fit with the concept overall? How can these products fill a gap in the menu or otherwise differentiate the drink offering? Are they relevant and appealing to the core customer? Can they be priced effectively—appealing to consumers but also delivering margin? How do these products solve for inventory, cost control, or operational issues? As with any new product, operators have to be very discerning as they evaluate whether to take them on, whether for dine-in or to-go service.”

Soriano says that on-premise establishments can best use RTDs in a few ways. In the short term, they are the perfect solution for “grab and go” in a COVID environment.

“Sanitary, quick to prepare, and consistent taste make them a great tool for on-premise,” Soriano says. “The challenge is ensuring the RTDs they are adding to their menu align with their clientele. Fortunately there are enough RTDs out there that as an operator you really have a choice of what caliber of product you want to offer. There are premium, low-calorie offerings with low ABVs as well as more spirit-forward, higher ABV offerings along with a range of spirit bases. By doing their research, the operators can use RTDs as a highmargin profit channel during COVID. And post-COVID, RTDs can be a compliment to their cocktail program.”

So what are the trending RTD flavors that consumers are requesting? The Volley team says they’re seeing a lot of lime, grapefruit, and mango as the flavor profiles used in RTDs lately. What’s more, the spirit bases are evolving—there are plenty of vodka bases, some gin, and in 2021, Volley is seeing several tequila options appear.

“An interesting distinction in the tequila-based RTDs is that several brands are attempting to ride off of the growing popularity of premium tequila, but are using Mixto tequila, which is generally considered an inferior quality of tequila,” says Wirth. Mixto tequila only needs to be 49% agave and can have 51% alternative sugars like fructose corn syrup, cane sugar, or others. Mixto tequila is cheaper to purchase and easier to work with because you can export it in bulk and fill it in a facility outside of Mexico.

“Other brands are actually malt beverages but are using tequila flavoring rather than any tequila at all so that they are able to sell their products in beerlicensed establishments, which offer a wider distribution opportunity and a lower excise tax,” says Wirth.

Cutwater Spirits’ canned Tequila Margarita made with real tequila is a consistent fan favorite. The company recently launched a Mango Margarita and are also rolling out both a Peach and a Strawberry Margarita in time for summer.

“With a varied ABV from 5% up to 14%, we really try to cover all the bases from our popular Vodka Sodas to the cult favorites Long Island Iced Tea and White Russian,” Cherney says. “RTDs are becoming more popular by the day.”

At ’Merican Mule, classic Moscow Mules are definitely trending right now. “It’s our flagship offering, and it’s the most widely known cocktail by the average consumer,” Mahoney says. “The flavor is extremely balanced and drinkable. It’s also an easy place to start when you can’t make up your mind when considering some of the other flavors that we offer.”

While the RTD space is riding a significant boost from the pandemic, industry experts agree that it will likely continue to grow beyond the lockdowns. “According to IWSR data, the RTD category has already surpassed the entire spirits category in volume consumption in 2020,” says Wirth. “With the opening of restaurants not far off and a return to outdoor events, combined with increased investment from the larger beverage brands, RTDs are just getting started.”

Volley offers premium canned tequila seltzer made with clean ingredients and no added sugars.