Since 2019, spirit-based ready-to-drink beverages (RTDs) have seen consistent growth across all U.S. states, with standout volume growth in California, South Dakota, and Connecticut.
In 2024, Wyoming, Colorado, Virginia, Tennessee, New York, Florida, Arizona, Indiana, New Jersey, and Wisconsin have emerged as the top ten states with the largest percentage increases in RTD sales, each exceeding 15% growth compared to the same period in 2023. These insights come from the IWSR US Navigator, a trusted source for monthly beverage alcohol data covering all 50 states.
Growth Drivers: What's Fueling the RTD Market?
Strong Forecast
The IWSR’s US Spirits-Based RTDs Report predicts a 6% compound annual growth rate (CAGR) for spirit-based RTDs from 2023 to 2028. This growth offsets the decline of hard seltzers, with hard teas, flavored alcoholic beverages (FABs), and cocktails/long drinks taking the lead.
Popular Spirit Bases
Vodka and tequila remain the dominant bases, thanks to the rising popularity of sessionable offerings like vodka or tequila sodas. Vodka, in particular, has leveraged its approachable flavor profile and versatility to maintain its lead over tequila, a position it has held for the past three years. Meanwhile, gin is gaining traction among younger consumers, particularly LDA Gen Z, though it still only holds 5% of the RTD market.
Convenient Packaging
A shift to 355ml cans has transformed the RTD market, accounting for 69% of sales from just 7% five years ago. These portable single-serve cans have opened doors to venues like sports arenas, concerts, and beaches, where glass bottles are restricted.
Regulatory Boosts
Legislation changes have supported the RTD category. For example, North Carolina and Pennsylvania recently reduced taxes on spirit-based RTDs and expanded their availability in retail outlets.
Innovation and Consumer Trends
Focused Innovation
While innovation in RTDs has slowed since the rapid proliferation of 2021-2022, the segment remains dynamic. Cocktail/long drink RTDs dominate new product launches, accounting for over a third of recent innovations. A more streamlined approach, with fewer core SKUs, helps consumers avoid confusion while still providing opportunities for exploration.
Category Crossovers
Brands are capitalizing on cross-category familiarity to attract consumers. Notable collaborations include:
- Sunny D launching a vodka-based RTD.
- Ocean Spray partnering with Absolut for a cranberry vodka RTD.
- Vita Coco teaming up with Captain Morgan for a rum-based offering.
- Welch’s releasing grape-inspired Vodka Transfusion RTDs.
Consumer Education
RTD bases are often misunderstood. Many buyers confuse malt-based products for spirit-based ones. Clear branding and education about alcohol bases could provide competitive advantages, though it carries risks depending on a brand’s broader portfolio.
Shifting Consumer Demographics
The RTD category is attracting younger, more male consumers, which is influencing style and flavor preferences. This younger demographic is also more inclined toward spirit-based products, particularly in on-trade settings like bars and restaurants, where brand-building opportunities are abundant.
The Future of Spirit-Based RTDs
As consumer preferences evolve, spirit-based RTDs are well-positioned for sustained growth. With their versatile flavor profiles, convenient packaging, and increasing availability, these beverages continue to carve out their niche in the U.S. market. For producers, understanding trends like spirit base preferences, packaging innovations, and demographic shifts will be key to success.
The spirit-based RTD category is not just growing—it’s reshaping how Americans enjoy beverages. Whether through innovation or strategic partnerships, brands have opportunities to tap into this thriving market and satisfy a wide range of consumer tastes.
Source: IWSR