Tristin Burdick | June 12, 2023
It’s a warm summer evening. Friends are gathered in a backyard, enjoying the laughter and camaraderie. Amidst the clink of glasses and casual banter, there is one commonality – a vibrant array of colorful cans, each holding an expertly mixed cocktail, no bartender required.
These are Ready-to-Drink (RTD) cocktails, a rapidly growing segment within the alcoholic beverage industry. RTDs offer consumers a mix of convenience, flavor, and innovation when it comes to enjoying a cocktail at home, on the beach, or anywhere else.
The re-emergence of RTDs and sustained growth has intrigued us. What’s driving this trend and sudden growth of RTDs? Who’s savoring these alcoholic beverages, and why do they choose them? These were some of the questions we asked ourselves.
To understand more about RTDs and what consumers think about them, we conducted a comprehensive survey. In the sections that follow, we’ll examine the responses we collected from three distinct groups: non-consumers of RTDs, trial consumers who’ve dabbled with RTDs but aren’t regular drinkers, and regular consumers who frequently enjoy RTDs.
General Consumer Behavior of Consumers
The responses we received from our survey revealed interesting insights into consumer behavior. First, we’ll start with the type of alcoholic beverages preferred by consumers. Unsurprisingly, the study reveals that the old favorites still hold sway, with beer (89%), liquor (80%), and wine (62%) being the predominant choices. Interestingly, ciders, RTDs, Flavored Malt Beverages (FMBs), Hard Seltzers, and non-alcoholic beverages also found their place, albeit in smaller percentages. This shows that while traditional options continue to be popular, consumers are open to experimenting with new and diverse offerings. This trend could indicate exciting opportunities for manufacturers willing to think outside the box and innovate.
Next, we shift our focus to where these consumers prefer to purchase their alcohol. Liquor stores were the go-to choice for the majority (71%), with supermarkets (59%) not far behind. Specialty stores that sell wine or beer (35%), and club stores like Sam’s Club or Costco (25%) also found favor. This suggests that while consumers are open to convenience, a significant percentage also value specialized selections. Retailers can take note of these preferences and cater to the demand accordingly.
Exploring how consumers discover new beverages, word of mouth is king (63%), followed by in-store promotions (38%), and experiences at bars or restaurants (35%). In a world where digital marketing is often the focal point, these findings serve as a reminder of the value of good old-fashioned conversations and firsthand experiences.
Consumers also weighed in on where they expect to find RTD products in a store. The results were split, with 25% voting for the liquor aisle/section, 19% for the beer aisle, and 8% advocating for a special aisle or section for RTDs. Retailers might consider this as an opportunity to experiment with store layouts to find what works best for patrons.
As we delve deeper into the consumer behavior surrounding RTDs, we find that when asked about what other types of alcohol should be near RTD products in a store, the top answers were hard seltzers (67%), FMBs (52%), Spirits (40%), and beer (36%). This information could be crucial for optimizing in-store placements and boosting sales.
Finally, when asked about how they prefer to purchase RTDs - individually, in a multipack, or in both formats, an overwhelming majority (68%) expressed no preference, while a significant group leaned towards multipacks (23%) over individual purchases (9%). It seems like flexibility and options might be the key here.
While these general habits provide a comprehensive landscape of consumer behavior, to enhance our understanding, it becomes crucial to further break down our consumer base, starting with those who currently don't consume RTDs.
Non-Consumers of RTDs
Kicking things off with the reasons preventing non-consumers from trying RTDs, it seems that the allure of traditional cocktails (41%) holds a strong sway of preference. Lack of knowledge about RTDs (36%) and uncertainty about their taste (26%) also proved to be notable deterrents. This suggests that education about RTDs, from their composition to their flavor profiles, could play a critical role in getting non-consumers to consider these beverages.
So, if these non-consumers were to try an RTD, what kind would it be? The responses pointed towards favoritism for classic cocktails - Margarita (40%), Bloody Mary (25%), Mojito (21%), and Daiquiri (19%) were the top choices. The preferred flavors to tickle their taste buds leaned towards Citrus (46%), Tropical (45%), and Berry (35%). Brands might want to capitalize on these preferences while designing their RTD offerings.
Digging deeper into non-consumers' perceptions of RTDs, we found that while they view RTDs as convenient, they hold reservations about their quality and flavor when compared to traditional cocktails. There's clearly a challenge here for RTD manufacturers to not only match the quality of traditional cocktails but also to effectively communicate this to potential customers.
If non-consumers were to try an RTD, they'd want information about the alcohol content (65%), ingredients (64%), base alcohol used (63%), prices (56%), and sugar content (40%). This thirst for detailed information indicates a discerning customer base that values transparency. Brands that prioritize clear, comprehensive labeling could gain an edge in this market.
What would make RTDs more appealing to non-consumers? Natural ingredients, specific types of base alcohol, low sugar, and no artificial colors or flavors were among the top responses. High-quality ingredients, a variety of flavors, and reasonable pricing were also cited as crucial factors. Interestingly, eco-friendly packaging did not rank as highly as one might expect in today's sustainability-conscious world.
While vodka, rum, and whiskey as base alcohols were popular among non-consumers, a significant proportion (62%) also expressed that the brand name would influence their willingness to try an RTD. Recommendations from friends and family were another key factor. These insights underscore the importance of brand reputation and word-of-mouth endorsements in breaking into this consumer segment.
Finally, the data shows that non-consumers would be most likely to try an RTD at a party (65%), a casual gathering with friends (60%), or a family holiday gathering (40%). Retailers could take advantage of these insights to position RTDs as a fun, easy option for social occasions.
While non-consumers of RTDs present a challenge with their reservations and high standards, they also represent a vast potential for market growth. By focusing on quality, transparency, flavor variety, and strategic marketing, brands can turn these non-consumers into avid fans of RTDs.
Trial Consumers of RTDs
Trialists, those who account for 51% of our survey respondents, have dabbled in the RTD market, but have yet to fully embrace it. Understanding their experiences, attitudes, and motivations could provide invaluable insight for brands seeking to convert these trialists into loyal customers.
To begin, it's worth noting that more than half of these trialists have sampled an RTD in the last six months, suggesting a degree of currency and relevance for these products. However, when it comes to increasing their consumption frequency, they cited a preference for traditional cocktails (54%), concerns about quality or taste (28%), and cost considerations (24%) as factors holding them back. This highlights some potential areas for improvement for RTD manufacturers, such as enhancing taste and quality perceptions and addressing pricing concerns.
Delving into brand awareness, Bacardi Ready-to-Drink (14%), Jose Cuervo RTD (9%), and 1800 Ultimate Margarita (7%) were the top RTD brands that trialists recalled consuming. These findings could be insightful for competing brands in terms of understanding their market positioning and visibility.
When it comes to the social aspect of consuming RTDs, trialists mentioned sharing these drinks with friends (45%), at parties (24%), during quiet nights in (24%), or at family gatherings (22%). This reflects the versatility of RTDs as beverages suitable for a range of social scenarios.
In terms of alcohol content, nearly 40% of trialists found it 'just right' in RTDs, which is a promising sign. However, 40% were still unlikely to consume RTDs even if they were readily available in their area, citing perceptions of RTDs being more expensive than other alcoholic beverages (66%) as a reason. These cost perceptions present a clear hurdle for RTD manufacturers to address.
Interestingly, trialists would be more likely to choose RTDs over their usual alcoholic beverages if they were more affordable (38%), healthier (29%), or contained higher quality ingredients (26%). This ties back to our earlier findings about the importance of value for money, health considerations, and quality perceptions.
When asked about their future purchase intentions, most trialists seemed reluctant to commit, with 57% being unlikely to purchase an RTD the next time they buy alcohol. However, on the brighter side, trialists did acknowledge the convenience of RTDs and expressed openness to trying new RTD brands, showing potential room for conversion.
Wrapping up, trial consumers of RTDs represent a ripe opportunity for growth in the RTD market. By addressing their concerns and leveraging their readiness for trial, brands can potentially nudge this group towards regular consumption. But to fully appreciate the RTD market dynamics, it's essential to also understand the habits and preferences of the frequent consumers of RTDs, which we'll delve into next.
Regular Consumers of RTDs
6% of respondents in our study identified as being regular consumers of RTDs. Understanding their preferences, motivations, and consumption habits is key to not only retaining this loyal segment but also converting trialists and non-consumers into frequent RTD enthusiasts.
At the outset, it's worth mentioning that our group of regular RTD consumers frequently indulge in these drinks throughout the week, indicating their affinity for RTDs as a go-to beverage choice. Moreover, their brand preferences are quite distinct, with Bacardi Ready-to-Drink, 1800 Ultimate Margarita, and Cutwater emerging as top choices. Other brands could certainly learn from these market leaders in curating their RTD offerings.
As for their consumption settings, consumers typically enjoy RTDs with friends, at parties, or while on vacation, demonstrating the social and convenience aspects that RTDs bring to their lifestyle. Alongside RTDs, they also enjoy other forms of alcoholic beverages, particularly beer and spirits, indicating a diverse palate and possibly a willingness to experiment with new flavors and formats.
When it comes to recommendations, it seems that most consumers of RTDs are already brand advocates, as they have recommended their favorite RTDs to friends who now share their enjoyment. This word-of-mouth advocacy can be a powerful tool for RTD brands, especially considering the influence of recommendations we noted in the behavior of non-consumers.
Interestingly, consumers hold largely positive perceptions of RTD brands. Most indicated that their expectations have been met or even exceeded, revealing a high level of satisfaction with current offerings. They perceive the price of RTDs to be on par with other types of alcoholic beverages, further cementing their value proposition.
Convenience and variety appear to be two primary factors driving RTD consumption. The convenience of a pre-mixed drink and the array of flavors available to choose from contribute to the appeal of RTDs. That said, consumers did express a desire for improvement in taste and additional flavoring options, offering RTD manufacturers clear feedback for potential product development and improvement.
How to Capitalize on this RTD Trend
As we reach the conclusion of our deep dive into the intricacies of the RTD consumer landscape, it's essential to home in on the key implications this data holds for RTD marketers and manufacturers. The insights gleaned from this survey offer invaluable guidance for shaping future strategies and optimizing product offerings in this dynamic and evolving market.
First and foremost, it's evident that there's a tangible potential for growth in the RTD sector. Despite beer, wine, and liquor being the go-to choices for most consumers, the existence of a committed segment of regular RTD consumers, combined with a significant number of trialists and non-consumers open to experimentation, signifies untapped opportunities.
For marketers, the diverse consumer preferences highlight the need for a multifaceted approach. The effectiveness of word-of-mouth recommendations necessitates incentivizing and leveraging customer advocacy. In-store promotions can help attract new consumers, while thoughtful product placement could enhance visibility and trial. Simultaneously, clear, informative labeling about alcohol content, ingredients, and taste descriptors can address consumers' information needs and quality concerns.
Manufacturers, on the other hand, could focus on product development. The demand for a broad range of flavors and cocktail types is evident, catering to which could drive new trials and repeated purchases. Likewise, ensuring high-quality ingredients and improving taste profiles can counter negative quality perceptions and meet consumers' expectations.
Price is another crucial aspect. With cost being a deterrent for some consumers, competitive pricing could make RTDs a more appealing choice. On a similar note, offering RTDs in multipack formats might align better with consumer preferences and foster purchase decisions.
The appeal of convenience that RTDs inherently possess is a powerful selling point. Emphasizing this aspect in marketing communications could attract both non-consumers and trialists, making them more inclined to choose RTDs over traditional alcoholic beverages.
Lastly, non-consumers and trialists represent potential consumer bases that could be converted with the right strategies. Tailoring messaging to highlight the convenience, variety, and quality of RTDs, combined with providing familiar cocktails and popular flavors, could well be the key to winning over these segments.
In conclusion, the RTD market, with its diverse consumer base and wide range of opportunities, offers fertile ground for marketers and manufacturers to innovate, influence, and grow. With consumer-centric strategies and a keen understanding of their preferences and concerns, the future looks promising for the RTD sector.