Spirits-based ready-to-drink (RTD) products will face a challenge to maintain double-digit growth rates in 2025, including a decluttering of items at retail in order for the segment to remain healthy, according to Bump Williams Consulting’s (BWC) monthly report.
The report digs into the growth of spirits- and wine-based RTDs over the past year, including how new-to-world brands (brand families that did not exist in other categories or segments outside of RTD when they were launched) are faring next to brand extensions, and how the top sellers are jockeying for share.
Spirits- and wine-based RTD dollar sales trends have slowed by more than half from +44% last year at this time to +20% year-to-date (YTD) through July 27 across all U.S. NIQ-tracked off-premise outlets. That segment of RTDs is on pace to lead flavored alcohol in dollar sales growth in 2024.
Putting the role of these RTDs into perspective, the incremental dollars coming from those segments are nearly two-times higher than flavored malt beverages (FMB), the second leading flavored alcohol growth segment.
Top Five Suppliers Account for Two-Thirds Of Dollar Share
The top five RTD suppliers account for two-thirds of total RTD dollars, with Gallo maintaining its leading share thanks to High Noon. Those suppliers include:
- Gallo, which has maintained its leading 28.7% share of RTD dollars;
- Anheuser-Busch InBev’s (A-B) Cutwater comes in second at 12.8%;
- Sazerac’s acquisition of BuzzBallz has helped to cement it as the No. 3 RTD supplier (11.9% of share), at the heels of A-B;
- Continued sales acceleration has moved BeatBox to the No. 4 spot and made it the top share gainer at +2.8 share points (7.2%) versus a year ago;
- Atomic follows holding 5% of share.
That doesn’t mean new contenders haven’t entered the ring: The now nearly 3,000 wine and spirit RTD items selling at retail through YTD 2024 marks a +6.2% increase over the same period a year ago. The top 30 brand families account for less than one-third (29%) of RTD items selling while all other brand families – which are 10.5% of total RTD dollars – account for a whopping 71%.
“In our opinion, this is clearly not sustainable if the segment hopes to continue achieving sales growth moving forward and avoid a deeper dilution of efficiency,” read the report.
New-To-World Brand Families Dominate
Taking a deeper look at the highest-selling spirit and wine-based RTDs, the top 30 brand families earned 89.5% of total RTD dollars YTD and have gained +2.7 share points versus a year ago.
Of the top 30 RTD brand families, 17 are considered new-to-world:
- High Noon
- BuzzBallz
- Cutwater
- BeatBox
- Monaco
- Nütrl
- On The Rocks
- Long Drink
- Surfside
- Carbliss
- Big Sipz
- Mom Water
- VMC
- The Club
- Two Chicks
- Sun Cruiser
- Rancho La Gloria
Unpacking new-to-world RTDs dominance, the top nine RTD brand families are new-to-world and the top 17 new-to-world brands represent 76.7% of RTD dollar share, up +6.6 points versus a year ago.
High Noon dollar sales trends have slowed from +50% last year to +16% YTD, but it remains the clear leader in this RTD landscape even with slowing trends off a bigger base. However, that slowdown did see High Noon dropping -0.8 share points of total RTD dollars YTD, while the other 16 new-to-world brands among the top 30 picked up a collective +7.4 points. Among this group, BeatBox, Surfside, VMC, Big Sipz, and Carbliss have the largest share gains.
Extensions, Cross-Overs Declining In Dollar Sales
All but three of the 17 new-to-world brand families are growing dollar sales YTD versus last year, meanwhile the top extensions — brand families that existed prior to expanding into RTDs — have slowed (-8.5%). The top 13 extension brand families are 12.8% of RTD dollars, down -4 share points YTD versus last year. Those include:
- Daily’s
- Jack Danel’s
- Crown Royal
- Absolut
- Chi-Chi’s
- Malibu
- White Claw
- Devils Backbone
- Jose Cuervo
- Truly
- Fresca Mixed
- Dogfish Head
The performance splits between new-to-world versus extensions in the spirits- and wine-based RTD landscape are “pretty jarring, particularly among the leading families in the space,” according to the report. Among extensions, there are only three that are managing to grow dollar sales versus last year, and only one (Absolut) that has managed to gain share of the spirits- and wine-based RTD segment.
Despite innovation this year, the most “mature” crossover non-alc brand families (Coca-Cola, Sunny D, Topo Chico, and Vita Coco) are failing to cycle their initial launch sales. The report isolated 21 crossover RTD items (non-alc brand families that have crossed into bev-alc) that launched during the first half of 2023 or earlier, and collectively, their dollar sales have declined by -50% versus a year ago.
“Beer-Like” Behavior in Packaging
While 4-pack 355ml can packaging dominates in share, consumers are transitioning to larger pack sizes with 8- and 12-packs, which have combined to gain nearly +4 share points. Those trends show “flashes of a more mature ‘beer-like’ behavior when it comes to either seeking value in a multi-pack format or amping up the desire for variety,” read the report.
Singles of all shapes and sizes have also seen building momentum.
Innovation Softens
RTD innovation dollars have dropped considerably from a year ago, with dollar and volume sales coming from new brands declining by -48% and -51% respectively.
The role of innovation has also been cut in half as dollar sales from new brands account for about 4-5% of total RTD dollar sales YTD compared to 10.4% in the same period last year.
Part of that trend can be attributed to a -28% reduction in the number of new RTD items selling versus a year ago, but dollar sales efficiency per item has also decreased by -28%. In other words, it would take the collective sum of the top 18 new RTD items through 2024 (roughly $51.2 million) to equal the total from the single top-selling new RTD item at the same time in 2023, the High Noon Tequila Soda Variety 8-Pack (roughly $51.7 million).
“This is not to say that innovation can’t and won’t play a major role in spirits- and wine-based RTDs moving forward, but it does suggest that decision making may have to get more tactical if you’re looking to make a serious dent in the established landscape,” the report said.