RTDs and High-Strength Premixes: Back with a Bang

The death of the once infamous RTDs/high-strength premixes category has apparently been greatly exaggerated. While a fundamental transformation did radically shake the category to its core, it also helped the category turn around historically haemorrhaging sales, shed its binge-drinking associations of the past and tap into new consumer audiences. Using the still simmering cinders of the financial implosion as fuel for renewed growth, as well as riding the wave of consumer trends favouring convenience, cocooning and on-the-go consumption, sales of RTDs/high-strength premixes are back on the up. Indeed, according to Euromonitor International’s latest research, the category’s prospects are now more bullish than ever.

Offspring of the Great Recession

The RTDs/high-strength premixes category has experienced an unprecedented overhaul over the past few years – so much so, in fact, that one would be hard pressed to find much common ground between the fluorescent, decidedly artificial concoctions that dominated the last decade and the new generation of readymade cocktails spearheading current growth. Innovation and recent socio-economic circumstances have also played their role in this overhaul, and RTDs now appear to be far better positioned to take advantage of shifting consumer preferences and a still volatile operating environment.

According to Euromonitor International’s latest research, RTDs/high-strength premixes is set to post more than 4% total volume growth in 2011, a notable reversal of previous declines and a performance which also sets the scene for future gains.

Cocooning, hectic lifestyles and greater interest from a younger audience have been the driving forces behind this rise. Belt tightening in many markets has constrained sales opportunities for the vast majority of alcoholic drinks categories but has proved to be a blessing in disguise for RTDs by providing them with an opportunity to better emulate the out-of-home drinking experience at home or on the go.

Euromonitor International has repeatedly highlighted the category’s notable prospects since the onset of the Great Recession, but its strong current performance would not have been possible without a solid blend of product innovation and accompanying promotional support. Classic cocktail mixes in a can helped set the initial tone but key manufacturers were also quick to further back their offerings.

For one, Diageo launched the latest multimedia campaign for its premix range in the UK in October 2010, planning to spend £5.9 million over the coming year. The campaign will include three 30- second television commercials, a 60-second online film, six radio advertisements, a Facebook competition and online advertising, with the latter new media focus becoming increasingly important in capturing the elusive millennial demographic.

While countries like Spain and the UK are spearheading the category’s growth in Western Europe, on the back of underlying trends favouring at-home consumption in the wake of severe austerity measures, strong performances should also be witnessed across all regions in 2011. In particular, North American consumers appear to be re-embracing the category while emerging markets enjoy mid to high single-digit overall volume growth.

Future prospects remain strong

Looking ahead, product reformulations (such as the infamous Tilt and Four Loko taurine-infused RTDs that eventually caved in to pressure and removed their controversial energy-boosting ingredients), the skyrocketing success of ginger beer in the UK market and some initial attempts to enter on-trade establishments through readymade cocktail offerings on tap (such as Ginger Grouse) are all already paving the way for buoyant future sales for the category.

Moreover, ongoing economic uncertainty could also provide an additional boost to generically off-trade focused RTDs/high-strength premixes. According to Euromonitor International’s latest research, the global RTDs/high-strength premixes category is expected to post a volume CAGR of more than 2% over 2011-2016. This will represent a marked improvement on the flat category growth seen over 2005-2011.

Manufacturers are successfully revamping the category’s positioning and overall proposition. Now they need to maintain – if not consolidate – their focus on innovation and building brand equity. Thanks to a heady mix of internal and external factors, the category once again finds itself in the right place at the right time.