RTDs - down, but not out...

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Related tags: Rtds, Alcoholic beverage

"Reports of my death have been great exaggerated". So said 19th century American novelist and humourist Mark Twain. Well if the ready-to-drink (RTD)...

"Reports of my death have been great exaggerated". So said 19th century American novelist and humourist Mark Twain. Well if the ready-to-drink (RTD) category had a voice it might well be saying the same thing. Because despite its problems, the sector is still alive and kicking.

No single part of the UK drinks market has received as big a hammering as RTDs in recent years. Not only has it endured declining sales it also has been the bête noir and cause celebre of the anti-binge-drinking lobby.

To be honest the heat is still on - as recent as last month this diatribe appeared in The Guardian, written by Martin Wainwright, the paper's northern editor: "The two worst curses [on town centres affected by binge-drinking] are alcopops and vertical drinking. The first is a questionable product, to put it mildly… The very name puts up two fingers to the notion of responsible drinking: let's mix a child's drink, pop, with heavy-duty alcohol, spirits. It has been suggested that the Rowntree Trust or some similar body should finance an experiment to free a community from alcopops for a period and then assess the results. They would have to buy off the manufacturers, no doubt, but it can't come a day too soon."

Gloom and doom has surrounded the category for some time. Last year a Publcan report on RTDs found testimonials from licensees stating "RTDs are disappearing…" and "…demand has declined dramatically in the last three years".

Between May 2004 and May 2005 sales volumes of RTDs dropped by 19 per cent. In the year up to March this year they had fallen by 16 per cent.

And yet, there does appear to be a sense of optimism surrounding the sector. While the latest brand statistics from AC Nielsen do not make stunning reading, there are nevertheless five brands in the top 10 in growth - including two of the top three (WKD and VK). This is hardly the sign of a market in total freefall heading for inevitable extinction.

The reality is more dull than the headline writers would like it to be. Quite simply RTDs are making a decent fist of very tough trading conditions, as several brand owners will testify. "RTDs is not a category that is going to go away," argues Deborah Carter, WKD brand controller at Beverage Brands. "Lots of categories are suffering on the on-trade. Some people would argue that the volume decline is going straight into cider, but I would say the truth is, it is going everywhere: to wine and to soft drinks."

Adam Irvine, innovation categorisation manager at Diageo, says the company is absolutely committed to the RTD category, and cites its value as the main reason.

"While RTDs are in decline at the moment and trading is tough it is still worth an awful lot. In whatever form they take packaged products are highly profitable for licensees. Fridge sales are very attractive to licensees - they are easy, practical and deliver easy cash margin.

"But fridge sales are declining apart from world beers and cider. In the last two years almost £3,000 worth of value has been lost from a licensee's fridge."

Adam believes brand owners are guilty of taking their eyes off the ball. "I don't think we have followed the consumer - we have just continued to focus on the offer for younger drinker. The consumer has moved on but the category has not.

"There used to be a lot of commonality between the kind of nights people went out on three to four years ago and RTDs. Now nights are much more aspirational and stretched. We need to get that back," he adds.

Related topics: Ready to Drink

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