In Adult Beverages Curiosity and Convenience Rule

Ready-to-drink cocktails are driving excitement in the alcoholic beverage segment.

Brad Perkins • Contributing Editor

The pandemic made people rethink a number of things, including their desire to try new products. In the convenience store industry, this became apparent among alcoholic beverage purchases, where consumers were interested in trying new fl avors, segments and types of beverages. But with gas and other prices going up, is another change on the horizon for the category?

Over the past year, the ready-to-drink (RTD) segment and spirits have led the way in the alcoholic beverage category, with Nielsen data showing that spirits sales were up 7.8% from June 2021 to June 2022, while beer sales dropped 4% and wine sales dipped 2%.

“In the world of spirits, we’re seeing tremendous growth and increased demand for high-priced bourbon and tequila,” said Eric Patterson, merchandising manager for Beacon & Bridge Market, which operates more than 30 c-stores in Michigan. “It seems like the pandemic drove customers to experiment, and they decided they really like things they might not have tried otherwise.”

SPIRITS-BASED RTDS SURGE

One of those items is RTD beverages, especially spirits-based RTDs.

According to NielsenIQ’s July 2022 report, “A Mid-Year Look at RTDs,” the segment is up across the board, with spirits-based RTDs leading the way with a 55% increase in sales compared to last year.

Spirits Lead Dollar Sales Growth at C-Stores

Beer sales dipped 4.2% while dollar sales of total spirits grew 7.8% at convenience stores for the 52 weeks ending June 18, 2022, per NielsenIQ.

Latest 52 Weeks - W/E June 18, 2022

Category

Beer/FMB/Cider

$ Change 1-Year % Change

$22.8 B -3.3%

Beer

FMB/Cider $19.0 B $3.80 B -4.2%

1.6%

Total Wine $1.50 B -2.6%

Total Spirits $3.10 B 7.8%

Source: NielsenIQ Total U.S. Convenience Data for the 52 weeks ending June 18, 2022

Total RTD sales were up 1.3% over 2021, with hard seltzers covering 43% of those sales and spirits-based RTDs accounting for 10.5%.

“New cocktail entrances are positively impacting spirits-based RTDs,” the report said, noting that the category is “significant and growing cross-category drinkers.”

The RTD category overall has seen $4.8 billion in offpremise sales in 2022 alone, driven by a 4.8% increase in sales in convenience stores. It’s a trend that’s not only great for consumers, but for stores in areas with more restrictive liquor sales laws.

“Up until now we only had nine stores that could legally sell high-proof spirits,” Patterson said.

But because spirits-based packaged drinks at 5% ABV or below are leading the sales, according to Nielsen, it opened new markets. And that’s led RTDs to follow the model seltzers began when they were first introduced.

“The ready-to-drink segment is exploding, similar to what we saw seltzers do a few years ago,” Patterson said. “The biggest difference, I think, is going to be the staying power of some pretty big names from the liquor side of our business. Brands like Jack Daniel’s, Jim Beam, Svedka and Crown Royal have entered the game in 2022, and those are the brands that customers recognize and naturally gravitate to.”

And that could be key as inflation, high gas prices and other hits to customers’ wallets lead them to revisit their choices when visiting the liquor aisle or beer cave.

“I think we’re going to see more customers going back to premium and below premium beer brands and shopping the above premium and craft a little less often,” Patterson said. “I think the seltzer customer is always going to be the seltzer customer but, with time, I think some of the higher-priced ancillary brands will give way to the White Claws and Trulys of the world simply because they are able to maintain a more affordable retail.”

While beer remains king, even that category isn’t immune to fluctuations in demand and price points. Patterson noted that as cost concerns grow, some customers may focus more on lower price points. However, the growth of RTDs, the popularity of seltzers and the desire to try new items is not going away anytime soon, especially as travel continues to pick up.

“I think a lot of retailers are taking a hard look at their overall store assortment and abandoning the one-stop-shop mentality,” he said. “The adult beverage category and others like it have grown larger than ever, and they are really what’s driving traffic into stores.” CSD

fast facts:

• Spirits-based ready-to-drink beverages saw a 55% increase in sales compared to last year, according to NielsenIQ.

• Customers are seeking variety from trendy flavors to new types of alcoholic beverage offerings.