Diageo backs maturing RTD category

Diageo has taken steps to reassure the trade that the future of the ready-to-drink (RTD) sector is a rosy one.

The spirits giant recently met with a number of leading pub companies to dispel industry fears that the RTD bubble has burst.

Diageo's Smirnoff Ice and Archers Aqua brands are leading players in an RTD sector declining by 11 per cent, but Ray Joy, Diageo's on-trade managing director, has insisted the prognosis is more slowdown than shutdown.

"We are aware of the negative speculation about the RTD category in Great Britain, however our research shows there continues to be a strong and growing consumer base for the category," said Mr Joy.

"We forecast a flattening out of the recent sales decline and a move back into around three to five per cent growth in the next two years."

Diageo has spent more than £2m on research into the RTD category this year, with particular emphasis on what motivates drinkers, the ways in which publicans can derive more value from RTDs as well as the important role of brands.

The research revealed that the decision by some drinks companies to reduce both the ABV of some of the leading brands and, in some cases, the bottle size from 330ml to 275ml had gone largely unnoticed by consumers.

"It's been a rollercoaster ride and the trade has enjoyed huge returns from RTDs over a very short period of time," added Mr Joy. "But if we are to be honest, we aren't going to be seeing 30 per cent growth figures any more - the category is just too big for that now."

In light of the research findings, Diageo is looking to work with licensees and pub companies to increase the number of RTD "drinking occasions".

"What we have to remember is that the RTD category is now worth £1.3bn," said Mr Joy. "That's bigger than vodka which means this category is not going to disappear. In fact we believe we can derive real value from the category and put RTDs back into growth in just under two years."