The easiest feature to write in the on-trade drinks industry right now is 'The Death of RTDs'. The most recent Nielsen data on the ready-to-drink market makes for pretty depressing reading. In the 12 months leading up to January 2007 the category lost 15 per cent in sales volumes and value fell by 14 per cent. This is a trend that has been taking place for some time. And now it seems the adventures of premium packaged spirits (PPS) like Bacardi Breezer and Smirnoff Ice are well and truly over.
However, the big brand owners are stating that form is temporary and class permanent and point to the value of the category to the trade.
"It remains a profitable category, still delivering over a third more sales value than packaged cider," according to Adam Irvine, innovation commercialisation manager at Diageo.
At last count the RTD market was still worth £800m - serious money in anyone's book. Plus the collapse in sales does appear to be bottoming out - what has emerged is a class of RTDs that are doggedly hanging onto sales, like WKD and to a lesser extent VK.
But while the fundamental question of whether or not RTDs are dying can be hotly debated, one fact is undeniable - the category is re-inventing itself and more specifically fragmenting. Rather than a new drinks category coming in to replace RTDs we are seeing several categories taking this market share - from cider to soft drinks to wine.
We are seeing a taste for colder, longer drinks emerging, with long spirits and mixers, soft drinks, cider and even wine now being served over ice. And many believe this over-ice serve is diluting the drinks, making them last longer and lowering the ABV.A shift in focus
Proof of this shift can be seen in the difficulty new RTD brands have had. One company that has aggressively backed the RTD category in the last two years has been Diageo.
In August 2005 it launched bourbon mix Slate 20. At the time the company stated it was learning from the very mature RTD market in Australia, which showed the huge popularity of darker spirits and mixes among young male drinkers.
Diageo also revealed it had a significant amount of new RTD brands on the production line due for launch in the coming years,
Fast forward two years and Slate 20 has achieved next to nothing and is under review. Exactly the same can be said of its other big new RTD launch, fruit ferment brand Quinn's.
"Last year we launched Quinn's, a totally new type of drink where everything, even the alcohol, is made from 100 per cent fruit, to respond to the opportunity for natural and authentic RTDs," says Diageo's Adam Irvine.
"Quinn's has not performed to the levels we expected at launch, and we and our customers have experienced demand that is lower than anticipated. We are currently reviewing its performance along with Slate 20."
If Diageo, with its impressive marketing budgets and excellent level of distribution, can't make headway then what is the future for the category?
"As a format RTD is still relevant, offering convenient and refreshing-tasting alcohol drinks that are good for enjoying while catching up with friends and on busier social occasions. Innovation in this category needs to be exciting and in line with changing consumer trends such as the demand for more sophisticated, authentic and differentiated offerings," argues Adam.
A simpler answer is the British consumer is looking for something different.
And yet despite this obvious shift towards lighter, less sugary and potentially healthier drinks, Diageo still fervently believes in the future of classic RTDs, a category others would deem to be, in the words of Monty Python, an ex-parrot.
"We still believe there is relevance in RTDs and an opportunity in them for both ourselves and our business partners. And decline has, in fact, stabilised in the last year," says Adam. "It is difficult to predict where the category is going to go, but we do know there is consumer opportunity for portable, convenient and great-tasting drinks. RTD and ready-to-serve deliver against this, which is why we are continuing to invest in this area for future growth."Relaunch, re-invention
Indeed. Only last week Diageo announced the relaunch of one of its original RTD brands, albeit exclusively for the Scottish & Newcastle pub estate. Smirnoff Mule - a mixture of Smirnoff vodka, lime and ginger - will be sold in 500ml glass bottles, a serving which is double the size of its previous incarnation.
So what will win out? Will one of Diageo's many new RTDs finally stick and capture the imagination of the drinking public? Or are we going to end up with the reality that appears to be emerging right now - the re-invention of the RTD? Will we see the growth of products like Sabai (see panel, above) which offer more
sessionable and low-energy drinking occasions?
Given the sudden explosion of the cider category, the equally surprising demise of certain powerhouse RTD brands and the rise of rosé wine sales - all in the last two years - I would have to say, your guess is as good as mine.
Something different: Sabai
One drinks company that is looking to take advantage of the desire for something different is Red Bull UK through its new wine spritzer brand Sabai.
Launched in Thailand in 1986, Sabai is a five per cent ABV import. The base makes up almost half of the drink and consists of premium Thai wine from the Siam Winery's spectacular floating vineyards. The remainder is made up of carbonated spring water.
The brand was first launched in the UK last summer. However, it would be fair to say the hibiscus flavoured drink didn't necessarily catch on in the way Red Bull might have hoped.
However, the company is displaying more confidence in its new flavour extension to the brand - pomegranate. After all, UK sales of pomegranate juice have rocketed in recent years. Supermarkets saw an increase in sales in the year 2005/2006 of 300 per cent and Tesco typically sells 500,000 litres per week.
The new pomegranate flavour has actually been launched specifically with the UK in mind, following feedback from UK consumers following the original launch of the hibiscus flavour.
And Nigel Trood, managing director of Red Bull UK, believes the proposition of Sabai will appeal to its core target market of young,
professional females who now want something different from traditional RTDs. He believes they will like its healthy connection with pomegranate as well as the fact it is a wine-based product rather than spirit-based.
"I think here we have the much more interesting connection with wine - it is innovative and sessionable. People don't necessarily want a whole bottle of
wine when they go out - a bottle of Sabai can fit the bill much better.
"Plus the problem with traditional RTDs is they are full of sugar and therefore quite high-energy. There is no well-being element to, say, a Bacardi Breezer. Similarly there is no half sugar [referencing Bacardi Breezer's recent launch of a Half Sugar range] element to Sabai - it just has less sugar."
Nigel believes the traditional RTD market is fragmenting and following research on Sabai does not think customers care about categories and definitions - the quality of the product is what matters.
"We don't really see Sabai as a traditional RTD. But we have done dual sitings of the brand and positioned it both as a spirits drink and a wine drink and people liked it in both. I think we are seeing an evolution of people's drinking habits more than a revolution."
And as a result Red Bull has unveiled £2.5m marketing campaign to underpin the launch of Sabai Pomegranate.
"I think we are really going to have a lot of fun with the product this summer," says Nigel. "We truly believe there will be a strong consumer demand and the focus on pomegranate will create