DARK RTDs

Dark and stormy

Australia’s RTD market is thriving, but with light spirit investment at a high, Molly Nicholas explores how dark RTDs are reclaiming market share.

Globally, RTDs represent an ever-evolving market ripe with opportunity. The category is well-established as a staple in the Australian beverage landscape, and despite reaching maturity, is still undergoing significant transformation.

According to the IWSR, Australia’s RTD market has enjoyed continuous volume growth since 2018, representing the third-largest market globally with one of the highest per capita consumption rates.

Within the category, volume has traditionally been dominated by dark RTDs, but more recently lightbased RTDs have been the topic of discussion, with significant investment in this area driving overall category growth.

Despite the recent decline, dark RTD still holds approximately 50 per cent of the total category, reinvigorated by premiumisation and innovation.

Sarah Campbell, APAC Head of Research at IWSR, says: “The RTD category is dominated by dark spiritbased drinks that have come under pressure in the face of moderation trends. This has led to the launch of more zero-sugar and soda-based variants, keeping interest in the category alive.”

Category innovation

While the dark RTD category has traditionally been associated with well-known Bourbon and whiskey brands, innovation in light spirit offerings has driven producers to uncover new, flavour-driven options in the dark segment.

Sarah Wilcox, Head of RTDs and Cider – Marketing at Carlton & United Breweries, says dark RTDs will be successful in their fight for market share if they keep up with changing tastes and category developments.

“For many years, the dark RTD category has been dominated by big, established brands with storied roots. Recently, we’ve seen these brands innovate into new flavours, ABV and low- and no-sugar propositions, with moderate success.

“However, as seen in light, the dark RTD is now being disrupted by the trend of more contemporary brand propositions and cross-category blurring,” she stated.

The dark RTD category hasn’t always been receptive to NPD and flavour extensions due to its association with heritage spirits, but in the same way that light RTD innovation has led the market share charge, Richard Bryant, Sales Director at Top Shelf International, says the tide for dark RTDs is starting to turn.

“It’s certainly something we’re looking to in NED, we’ve got a successful & Cola business, but more and more we have customers and consumers asking us for the next twist on that classic – in higher ABV, in flavour twists,” he stated.

“It’s a challenging market and twists on the dependable, on experiences you can trust, will be the key to breaking through. Our pipeline includes Vanilla Cola and Cherry Cola expressions, our first flavoured whisky – Golden Bickie – opens up all new possibilities as well.”

Premium appeal

Another of the notable movements in dark RTD is the growing emphasis on premiumisation. Considering the higher price point, and the element of sophistication often associated with whiskey-based RTDs for example, the premium appeal is set to thrive.

Sarah Camerlengo, Brand Manager at Vok, says: “We’ve seen brands incorporating high quality ingredients and unique flavour profiles, such as smoky and spiced notes which are gaining popularity, catering to adventurous palates.”

Comprising a well-balanced mix of men and women in the 2540 age bracket, the demographic of RTD drinkers puts emphasis on quality, craftmanship and premium ingredients. Among culturally driven Millennials, highlighting these values can drive margins through increased spend per head.

“These consumers typically value quality and authenticity, often seeking out premium, well-crafted products that offer a sophisticated taste experience. They seek convenience without compromising on quality and are drawn to rich, sophisticated flavours that dark RTDs, particularly whiskey-based, offer,” Camerlengo added.

The sweet spot

Lemon has been identified as the most noteworthy flavour trend in the RTD market this year, and much of the desire for fruity RTDs can be attributed to Hard Rated.

Recent data from Circana has revealed Hard Rated as the brand that brought in the most cumulative revenue in 2023, generating $157 million in Australia alone, paving the way for successful launches of fruity, dark RTDs.

One example of innovation in this area is the new Jameson Dry and Lime, combining dark spirit base with a light lime mixer to bridge the gap between light and dark RTDs, with a flavour profile that is approachable to a broader consumer group.

Kristy Rutherford, Marketing Director, Pernod Ricard Australia, says: “The light spirits innovations have had an incredible impact on the category. Consumers are continuing to look for refreshing and flavour-driven options.

“We can see that the trend of citrus or lemon flavoured SKUs is not going away with successful releases of this style from different brands over the past few years.”

Although flavours and styles are evolving within the RTD market, the can format is still dominating the landscape, appreciated for its lightweight portability. While we haven’t seen too much variation in this area, ABV options are advancing.

“Sleek, portable packaging formats enhance convenience without compromising style, catering to modern consumer preferences – dark spirits are typically seen in a 375ml format to suit the dark spirit and mixer serve,” said Camerlengo.

“The ABV levels are carefully balanced but generally, there is an entry level ABV option and higher strength option in dark spirits.”

This can be seen in the 23rd Street Australian Whisky & Cola range, which offers both five and eight per cent variations, and the three ABV variations offered by NED Australian Whisky & Cola, giving the consumer a choice between a lighter, smoother finish, or a bolder expression.

Retailer tips

According to Bryant it would be easy for retailers to list the same popular SKUs across key highprofile fridge spaces, but those who dare to be bold are usually ahead of the curve.

“Runaway success stories start with a spark, and we’ve learnt from white spirit RTDs that if you give new brands and ideas the platform to shine, we can breathe a lot of new life and margin into that category,” stated Bryant.

Camerlengo strikes a similar tone, encouraging retailers to trial new and exciting products.

“Collaborations and limited-edition releases are driving excitement and engagement, creating opportunities for retailers to attract new customers and enhance their product offerings in the competitive RTD market.”