Ready-To-Drink Cocktails Market

Market Overview

The global ready-to-drink cocktails market size was valued at USD 893.44 million in 2022. It is estimated to reach USD 2,436.84 million by 2031, growing at a CAGR of 11.8% during the forecast period (2023–2031).

Ready-to-drink (RTD) cocktails are individually packaged and prepared for consumption. RTD cocktails are pre-batch drinks that have been canned or bottled. The advantages of such a drink are that the consumer need not be concerned with technique, balance, or having a variety of components at home. The consumer is supposed to open the cocktail, pour, and serve it. These were initially developed in the US in the late 1980s through 2004 as sweet, fruity, "very appealing" concoctions using less expensive malt alcohol bases.

The type of alcohol base utilized significantly establishes the development path for a ready-to-drink cocktail. Everything from the taste and labeling to the price and distribution will depend on whether the beverage is made with malt, spirit, or wine. The selected base can also determine which categories of retailers can sell the beverage in each state. In recent years, the market has shifted toward more traditional concepts of cocktails, employing more natural-tasting, fresher ingredients as their base.

Highlights

• Spirit-based RTD cocktails dominate the product segment
• Bottled RTD cocktails dominate the packaging segment
• Supermarkets/hypermarkets dominate the distribution channel segment
• North America is the highest shareholder in the global market

Market Dynamics

Global Ready-To-Drink Cocktails Market Drivers

Rising Demand for Low Alcohol Flavored Drinks

Globally, the consumption of alcoholic drinks is decreasing due to the rising consumer focus on health and well-being. RTD cocktails contain a low amount of alcohol, ranging from 4% to 7%, along with added flavors like lemon, cranberry, orange, and passion fruit, attracting health-conscious consumers. Therefore, low alcohol by volume (ABV) cocktails have gained traction over the years. Consumers who want to lessen their alcohol consumption or are moderate drinkers consume RTD cocktails as a substitute for wine and other spirits. 

Furthermore, changing lifestyles and the increasing demand for convenient products drive market growth. Innovation in RTD cocktails using real fruit juices with no artificial sweeteners drives market demand. The per capita alcohol consumption in Australia, Russia, Brazil, China, France, and South Africa has declined significantly in recent years. Moreover, the availability of organic, gluten-free, and keto-friendly RTD cocktails encourages more consumers to adopt these products.

Premiumization

Consumers worldwide have been switching to premium brands of RTD cocktails with high product quality and amplified brand experience. Rather than spending money on normal alcoholic drinks, consumers have started spending on drinks that provide an enjoyable experience, driving the market for RTD cocktails. In addition, the canned container enhances the premium appearance and increased attractiveness of RTD drinks, which is why manufacturers have been attempting to enter this market with additional product launches. For instance, in June 2020, Brown-Forman launched a range of spirit-based canned cocktails through its brand Jack Daniel's. This range includes Jack & Seltzer, Jack & Cola, and Jack, Honey & Lemonade. This canned cocktail provides consumers with a convenient and premium quality Tennessee whiskey.

Global Ready-To-Drink Cocktails Market Restraint

Growing Demand for Non-Alcoholic RTD Beverages

The consumption of non-alcoholic RTD beverages is rising among consumers, especially in countries like France, the U.K., Germany, Spain, and Canada, owing to the rising health consciousness. The growing popularity of probiotic-rich drinks has been increasing over the past few years. In addition, consumers are aiming to cut back on their alcohol intake and switch to healthier drinks and fortified water due to the rising rates of obesity, liver illness, and other health-related ailments. This could limit the growth of the RTD cocktail market. Moreover, the demand for RTD juices with botanical ingredients and RTD energy drinks is also expected to restrain the growth of the RTD cocktails market.

Global Ready-To-Drink Cocktails Market Opportunities

Increasing Inclination toward Convenience

The demand for RTD cocktails is driven by consumers' preference for ready-to-eat and ready-to-drink products due to their busy lifestyles and demanding work schedules. The market for RTD cocktails is expected to be driven by the growing working population, bolstered by the growing number of working women. The demand for RTD cocktails is also driven by numerous consumers who prefer offering homemade drinks at house parties and social gatherings. The growing preference for cocktails among millennials is expected to be a key factor supporting the growth of the RTD cocktails market.

Furthermore, RTD cocktails have made making a cocktail less time-consuming and energy-intensive, encouraging amateurs to try these drinks at home. RTD cocktails offer consumers the comfort of drinking their favorite beverages anywhere and provide them with the immediate satisfaction that they expect. Nowadays, young consumers are willing to spend more money on healthy and convenient food and drink options as they lack the time to cook throughout the day. The rising demand for high-quality, organic, ready-to-drink cocktails could present additional growth opportunities in this market.

Regional Analysis

Based on region, the global ready-to-drink cocktails market is bifurcated into North America, Europe, Asia-Pacific, Central and South America, and the Middle East and Africa.

North America Dominates the Global Market

North America is the most significant global ready-to-drink cocktails market shareholder and is estimated to exhibit a CAGR of 11.4% during the forecast period. The region with the biggest revenue share is anticipated to lead during the projection period. The U.S. accounted for the greatest revenue share in the regional market because of the rising demand for various flavors of ready-to-drink cocktails and consumers' evolving preferences for items that can be consumed on the go. The region's demand for the product has been boosted by growing consumer knowledge of the beverages' health benefits. In addition, the product's popularity has been growing as more breweries and distilleries in the US and Canada incorporate RTD substitutes. The demand for RTD cocktails is high among young consumers in the region. The region's companies emphasize product innovation and development to attract more consumers.

Europe is estimated to exhibit a CAGR of 11.0% over the forecast period. The increasing interest in maintaining one's health and wellness and shifting focus toward low-calorie drinks drive the demand for RTD cocktails in Europe. Consumers are trying to minimize their alcohol consumption, which, in turn, could offer new growth opportunities for the RTD cocktails market in Europe. Furthermore, the rising prevalence of obesity in Europe, which affected 10% to 30% of adults in 2018, according to the WHO, is also influencing consumers to adopt RTD cocktails. Moreover, the growth of RTD cocktails has accelerated after the outbreak of the coronavirus pandemic due to the lockdown, resulting in the shutting down of bars and restaurants and restrictions on movement.

In Asia-Pacific, RTD cocktails are particularly popular among light drinkers. These beverages are a great option for young customers due to their convenience, low alcohol content, and reduced price compared to cocktails served in bars. Moreover, product launches and expansions in this region are also anticipated to boost market growth. For instance, in March 2020, Suntory Holdings announced the debut of its signature RTD cocktails in Taiwan. Similarly, in May 2018, The Coca-Cola Company launched Lemon-Do, an RTD cocktail, in Japan, with 3%, 5%, and 7% alcohol versions.

In Central and South America, RTD cocktails are popular due to their proximity to the countries of North America and their similar consumption habits. The COVID-19 epidemic resulted in the shutdown of many bars and liquor stores, which increased demand for RTD cocktails. These drinks are especially popular among younger consumers looking for on-the-go products. In addition, due to the lockdown across Central and South America, companies such as AB InBev in Brazil are taking active initiatives as part of their business strategies to support local businesses such as restaurants and grocery stores. Brands are taking these initiatives to stay relevant in the market while helping the community. However, municipalities such as that of Ecuador discourage drinking during the lockdown. These trends slightly impacted the demand for RTD cocktails in 2020; however, it is expected to exhibit a quick growth rate over the forecast period.

Saudi Arabia, Iran, Kuwait, Yemen, and the Emirate of Sharjah are just some Middle Eastern countries where alcohol is illegal due to political, social, and religious beliefs. Alcohol consumption in other parts of the Middle East remains low, even in regions where alcohol can be consumed. Nevertheless, the regional market offers growth opportunities for RTD cocktails with low alcohol content. However, this market will likely face intense competition from beverages with 0% alcohol. According to a report released by the ISWR in 2018, the African market offers various growth opportunities for RTD cocktails as alcohol consumption across the continent is high. In addition, companies like Diageo and Heineken have breweries in the region and hold a significant market share. As the economic conditions in Africa improve, consumers are expected to move away from low-priced low-quality beverages and switch to RTD cocktails.

Segmental Analysis

The global ready-to-drink cocktails market is segmented by product, packaging, and distribution channel.

Based on product, the global ready to drink cocktails market is divided into wine-based, spirit-based, and malt-based RTD cocktails. 

The spirit-based RTD cocktails segment is the highest contributor to the market and is predicted to exhibit a CAGR of 12.2% over the forecast period. Spirit-based RTD cocktails usually contain up to 5% alcohol mixed with other ingredients, such as juices, and are available in single-serve packaging and various flavor options. Vodka, whiskey, gin, tequila, and rum are RTD cocktails' most commonly used spirits. Pernod Ricard and Diageo are among the key brands operating in the spirit-based RTD cocktails market. In addition, the spirit-based segment is predicted to be driven by the surging demand for flavored drinks with reduced alcohol content due to growing health concerns over the forecast period. These drinks offer a wide range of variety, such as cocktails infused with ginger, rose, and lavender along with spirits, which has increasingly made them the most preferred alcoholic beverage among customers and is expected to be the fastest-growing segment.

Malt-based products contain barley as their primary ingredient, which is malted before processing. This malt base is mixed with other artificial or natural flavors to create a taste profile different from regular beers and similar to cocktails sold at bars. The market for ready-to-drink (RTD) cocktails has undergone a resurgence owing to lifestyle-led changes, diverse new product development initiatives, and innovative product packaging. The food and beverage market is fueled by convenience. Therefore, RTD cocktails are gaining popularity, especially among young consumers looking for on-the-go food and beverages. Malt-based RTDs were popular in the past and held a majority of the market share.

Based on packaging, the global ready-to-drink cocktails market is segmented into bottles and cans packaging. 

The bottles segment owns the highest market share and is anticipated to grow at a CAGR of 11.5% over the forecast period. The ready-to-drink idea was first launched in a bottle package design and quickly gained popularity worldwide. RTD cocktails have been made available in glass bottles due to the shortage of aluminum in some nations, including the U.S. For instance, High West Distillery sells glass bottles of cocktails aged in barrels. The demand for RTD drinks in glass bottles has also increased due to the rising awareness of water and land pollution from beverages packaged in plastic bottles.

Cans are anticipated to experience a higher CAGR over the projection period due to the rising consumer demand for portable and convenient packaging. Cans are a common choice for packaging because they are portable and small. Consumers increasingly prefer RTD cocktails over wine and spirits because of their more sophisticated alcohol preferences and choices. Several customers are asking for high-end RTD cocktails, many in cans. As a result, the manufacturers have been making more product launches in this format to capture this market. Rising environmental concerns and the easy recyclability of cans are also driving the demand for this packaging.

Based on distribution channels, the global ready-to-drink cocktails market is bifurcated into hypermarkets/supermarkets, online, and liquor stores.

The supermarkets/hypermarkets segment dominates the global market and is projected to exhibit a CAGR of 11.8% over the forecast period. The supermarkets/hypermarkets segment includes all types of grocery stores, convenience stores, and supermarkets & hypermarkets through which RTD cocktails are sold. Supermarkets are well-established distribution channels for manufacturers of RTD cocktails and play a key role in the market since they have a wide consumer reach. The improving scenario of the retail industry is expected to expedite the segment growth over the forecast period.

In addition, grocery stores are among the significant distribution channels for RTD cocktails. Grocery stores help RTD cocktail brands stay customer-focused by offering products that consumers want. In contrast, the availability of a broader range of products across categories in supermarkets/hypermarkets makes it challenging for the brands to appeal to their target audiences.

Liquor stores have been a popular distribution channel for alcoholic beverages for a long time. However, when it comes to RTD cocktails, liquor stores held a smaller share when compared to other segments due to the easy availability of RTD cocktails in supermarkets and grocery stores. Liquor stores are more popular in countries of Asia-Pacific, such as India, where alcoholic beverages are not permitted to be sold in grocery stores and supermarkets.

Recent Developments

• May 2023- Dulce Vida Tequila introduced three new ready-to-drink cocktails packaged in Tetra Brik® Aseptic 1000 Square cartons. Each Dulce Vida cocktail is made with real fruit juice and all-natural ingredients available in Margarita, Watermelon Margarita, and Paloma.
• March 2023- Jim Beam, the world's most popular bourbon, shook the beverage aisle by introducing four distinct, crisp, and cool ready-to-drink (RTD) cocktails. The four distinct flavors of cocktails are strawberry punch black, cherry lemonade, sweet tea lemonade, and citrus punch.