RTDs: How to innovate

Related tags Target market Innovation

One of the more interesting discoveries this year was that Young's pub company had de-listed all ready-to-drink (RTD) brands from its pub estate....

One of the more interesting discoveries this year was that Young's pub company had de-listed all ready-to-drink (RTD) brands from its pub estate.

Whether Young's was making a statement about falling sales or the unfortunate association the category has with irresponsible drinking, it was just yet another sign of the problems facing RTDs.

There is no doubt pubs are getting very nervous about them. And this is not only impacting on brand owners' distribution targets, but it means they are beginning to have real trouble getting any new products to market. Discussing WKD's on-trade strategy, Debs Carter, brand controller at Beverage Brands, says the company is going to keep its three variants of WKD but is keen to introduce new brands and concepts.

"Innovation is the key to category stabilisation," she says. "And that is why we came up with Caledonian Cooler. But to be honest we are struggling with distribution."

Caledonian Cooler was launched this year, and it has a very different target market to that of WKD. And as much as this gives the brands a point of difference, it makes it hard for Cooler to get listings off the back of WKD's success.

"We are wary of forcing Caledonian Cooler into the same outlets as WKD," says Debs. "After all, the target markets are very different. Cooler is aimed at females in their mid-twenties." Playing it safe

But according to marketing director Karen Salters there is a wider problem, where pub companies have no room for error and as a result are unwilling to take any risks. "It is just very hard to get new product development (NPD) into the category - it is actually easier in the off-trade now. People want immediate return and retailers are unwilling to take chances," she says.

"You are lucky if you get a window of more than eight to 12 weeks to test the product in trade - and it has to work immediately. And yet we have invested in the concept and spent good money just to get it to market."

However, Beverage Brands' situation with innovation and the future of Caledonian Cooler are hardly likely to be helped by the decision by Diageo to dump three of its recent RTD product innovations. Archer's Vea, Slate 20 and Quinn's were all backed by serious money and serious marketing in the past 18 months or so, but are currently being pulled from trade.

And as Global Brands managing director Steve Perez puts it, later in this report: "If Diageo can't do it then no one can!"

Innovate to survive

When Diageo announced it was to dump the three products earlier this year, Elizabeth Finn, head of innovation at Diageo GB, said: "There are always risks you take with launching new brands, especially completely new types of products such as Quinn's.

However, innovation remains a hugely profitable area and has contributed more than £1bn of sales value over the past three years in the beer, wine and spirits category. We will continue to look at opportunities to increase this further."

So while there may well be more NPD in the pipeline at both Diageo and Beverage Brands, it is going to take a real sales job on the pub companies to get them to work. The case for RTD innovation has taken a real knock with the failure of Slate 20 and Quinn's and the struggle for listings that Caledonian Cooler is enduring is further proof of this.

The brands that are managing to grow volumes have done so with a policy of consolidating flavour ranges. Drinkers seem less willing to experiment. So while the RTD adventure is far from over, it seems it may be a long time before it enjoys decent growth again.

Related topics Ready to Drink

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