The next big thing?

With the growth of the ready-to-drink sector slowing, companies are turning their attention to pre-mixed wine. Ben McFarland reports.​

Having trundled along the road of success for the best part of a decade, are the wheels falling off the ready-to-drink (RTD) bandwagon?

In the last year, sales of RTD products have declined for the first time since the alcopop controversy of the early 1990s and many have pointed the accusatory finger at Gordon Brown for spoiling all the fun.

The Chancellor's decision last year to hit the sector with a tax raise of 65 per cent, around 12p on a 275ml bottle, undoubtedly hurt the RTD sector but according to Graham Page, consultant for AC Nielsen, its subsequent decline cannot be entirely attributed to the man with the red briefcase.

"The market was showing a lower level of growth prior to Gordon Brown's intervention and by September it was actually in negative decline," he said. "The Chancellor's decision merely moved the peak forward by several months."

However, considering the market is still growing by nine per cent and the fact that Britons still spent over £2bn on RTDs last year - a 50 per cent increase on 2001 - the current diagnosis is closer to slowdown than shutdown.

"The category certainly won't disappear," added Graham. "It's still growing and some brands are doing extremely well. Like all mature markets, it couldn't sustain double digit growth over a prolonged period of time."

The fridge door policy is becoming increasingly discriminatory as Diageo recently found out. Last week, the drinks giant withdrew its Gordon's Edge concept aimed at the grown-up drinker less than 12 months after its glitzy launch. Despite bags of marketing nous and an even bigger bag of marketing spend, reportedly £3.5m, Diageo was forced to concede defeat in its attempt to broaden the RTD sector beyond its 18 to 24-year-old vodka-dominated heartland.

"I think it was a brave move by Diageo to try and introduce a different kind of product for a different age group under a major brand name," Graham said.

"But the likes of gin and whisky are quite challenging. Also, young people aren't as enthusiastic about tastes and spirits that are better known by their parents."

While coaxing an older generation into the category does wonders for volume sales, it presses all the wrong buttons for those 18 to 24-year-old drinkers who are constantly alert to what's cool in the fridge.

Bacardi Breezer, widely regarded as the founding father of the premium packaged spirit (PPS) sector, is suffering at the hands of its rivals for exactly this reason. Having shown Tom Cat the cat flap for fear that it was becoming less funky feline and more Bagpuss, the PPS brand is set to take a new direction.

Roger Harrison, Bacardi-Martini's "low proof" marketing controller, said: "It can be an achilles heel if you have the mother or older sister drinking the brand as the 18 to 24-year-old market will soon move onto something else.

"We're now looking at other categories for 18 to 24-year-olds," he added. "The RTD sector has shrunk as there hasn't been enough innovation in the category and it's innovation that drives the category.

"In the long term I think there will only be three RTD brands - which ones I don't know. But to succeed you need to invest in TV and have a strong franchise - there are not many brands which can do that."

With limited opportunities for growth for spirit-based concepts, drinks companies seem to be turning to the burgeoning wine market in an effort to reinvigorate the stagnant RTD sector.

Having been one of the few major players to refrain from dipping its toe into the PPS sector, Scottish Courage recently dived full length into a budding wine-based premium packaged market with the launch of Bliss, a blend of Californian chardonnay, fruit juices and sparkling water.

Fiona Vernon, marketing director of innovation at ScotCo, said: "Current RTDs available all sit within a tight area on a taste map, offering sweet, citrus, boiled sweet type flavours and consumers can't drink too many in a row.

"We feel there is a genuine opportunity for a product that sits between the sweetness of RTDs and the dryness of wine."

Bacardi-Martini is poised to make an entrance into the category with Coolmira Coast, a wine-based range currently on trial in a number of Wolverhampton & Dudley outlets.

GBL International, famous for its successful VK Vodka Kick brand, has also thrown its hat in the ring with the launch of Cavela, a series of competitively priced fruit flavoured Cava.

Steve Perez, GBL's managing director, said: "It's a good thing that there are a few brands investing in the category as it demonstrates that there is a genuine demand for these products. It's another new and exciting thing that people can add to their repertoire of drinks."

While a preferential tax bracket is a factor, it's not the only reason. The on-trade wine market is currently growing at 15 per cent with growth across all sectors and countries except Germany and Spain. The same consumers that are targeted by the likes of Archers Aqua and Reef during a big night out are equally at home sipping on a glass of chardonnay at the beginning of an evening.

With the advent of single-serve brands such as Intro2, wine companies themselves have already attempted to make the transition from the dining table to the young person's venue.

However, with an ABV around the 11 per cent mark, these wines fail to directly compete with the likes of Archers Aqua and Smirnoff Ice and quaffing a miniature bottle of Merlot on the dance floor has yet to catch on.

AC Nielsen's Graham Page added: "A lot of the people switching from the PPS market have gone to wine and now drinks companies are trying to merge the two sectors. It's no surprise that companies have recognised a huge opportunity."