The birth of 4th alcoholic beverage category
Rajeev-sharma-1
Rajeev Sharma
September 8, 2021

Growing evidence supports a separate “category” status for RTDs

The past few years has seen a significant rise in the popularity of alcoholic beverage segments, together referred as "Ready to Drink (RTD)" or "Beyond Beer". The most impressive growth has come from hard seltzers led by brands like White Claw and Truly, as well as new RTD cocktail drinks. Just in the past two years, numerous competitive products have entered the market with a multitude of flavors, functional benefits, package formats, and alcohol bases.

With the breathtaking speed of innovation and growth in RTD alcoholic beverages, stores have simply not kept up with the changes needed to minimize shopper confusion.

One of the biggest pressing question is whether it is better to combine many of these emerging segments and treat it as a separate RTD category? The candidate segments are Hard Seltzers, Ready-to-Drink Cocktails, Ready-to-Serve Cocktails, Flavored Malt Beverages (FMBs), Hard Kombucha, Hard Water, Hard Coffee, Cheladas, and even Canned/Boxed/Bottle Single Wines.

This was one of the fundamental questions addressed in the 2021 RTD/Beyond Beer study by VideoMining, using in-depth analysis of the shopping behavior for more than 4 billion shopper trips to Grocery and Convenience stores in the past 2.5 years.

The study has built overwhelming evidence that support forming a separate alcoholic beverage category for RTDs, with the various segments organized to help shoppers navigate the shelves better. In fact, when treated together, RTDs now account for more than 11% of sales for total alcoholic beverages. The sales of the RTDs has steadily increased year over year, from 7% in 2019 to 11% for the first half of 2021. Traditional Beer is feeling the most impact of RTDs, steadily declining in sales from 32% in 2019, to 30% in 2020 and 29% in 2021. Wine also lost a point in share in 2021 while Spirits maintained its share.

Because of both volume and variety of choices, RTDs will likely continue to chip away at the shares of traditional segments with the popularity and unique options of RTD products. Beer is seeing the most impact because the initial product offerings like Hard Seltzer were more similar to Beer. As the segments expand and introduce new twists on non-alcoholic beverages and convenience of RTD Cocktails, the share of the “category” will continue to grow.

While it is noticeable that RTDs are growing in sales, it is also offering a different kind of in-store behavior when looking at what is being cross purchased along with the segment. Buyers of RTD also purchase a Traditional Beer product 20% of the time, Traditional Wine 15% of the time and Traditional Spirits 4% of the time. Although RTD is chipping away at the traditional segments sales, it is frequently purchased with other alcohol products.

Besides the question about creating a separate “RTD” category, there are many other pertinent questions addressed by the 2021 RTD/Beyond Beer study, such as:

  • Where should the additional shelf/cooler space for RTDs come from?
  • Where should it be located in relation to other alcoholic beverages?
  • How should the shelf be organized to make it easier to shop?
  • Where should RTD secondary displays be located to be most effective?
  • Who are the shoppers for each RTD product segment?
  • What is the trend in the different RTD segments?

It is important to develop fact-based insights to align the RTD merchandising/marketing and product innovation with actual shopper needs and trends.

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