The brief history of the UK’s ready-to-drink (RTD) market has more plot twists than a series of Broadchurch. It has been subject to unjustified hype, moral panic, punitive taxes and the vagaries of fashion.
A headline reading of the latest market data suggests it is the last of these that is currently holding sway, as rival categories like cider muscle in on its turf, and elements of its core, youthful audience develop more sophisticated tastes for premium spirits and quality beer.
The category dropped 14.3% in the on-trade in the year to 27 December 2014, but is still worth just shy of £270m annually, according to CGA Strategy.
Of the top 10 brand ranges, WKD, Smirnoff Ice, VK, Jeremiah Weed, Bacardi Breezer, VS Sorted and Reef all experienced double-digit decline. Some of those sales went to the born-again Hooch and the new Famous Grouse spin-off Ginger Grouse, which posted sales increases of 29% and 256% respectively, but the impact of rapid growth in rival categories is clear.
Yet, despite the decline, the big brands in the sector are in anything but freefall. The category is being kept afloat by a core group of major brands. Between them, the Crabbie’s family (as measured by CGA), WKD, VK and Smirnoff account for more than 80% of on-trade volume sales.
Given the ripple effect from rival categories, the relatively flat performance of Crabbie’s during the past year seems perfectly respectable. Brand owner Halewood International doesn’t regard Crabbie’s alcoholic ginger beer as an RTD — though CGA does — but it launched the Fruits range squarely at the category last year, pursuing the flavours trend that has benefited other drinks categories.
Marketing director Richard Clark says that Fruits has “achieved significant popularity among consumers within a short space of time”.
He adds: “The range has created differentiation from other RTDs with its liquid and natural ingredients allied to a brand that people love and trust.”
For a category that some critics might regard as shallow and ephemeral, the brand range that occupies top spot by value, WKD, demonstrates the importance of sustained supplier support.
Debs Carter, marketing director for alcohol at WKD supplier SHS Drinks, passes off much of the category decline as a reflection of a wider on-trade downturn. “Half of all alcohol brands in the top 50 are showing decline,” she argues.
“Younger consumers who are the target market have a much wider repertoire of drinks than they did 20 years ago, when RTDs first came on the market. They’ll now be drinking across a much broader range of occasions and a bigger variety of product categories, Carter believes.
“But RTDs remain perfect for high-tempo occasions, whereas something like cider is for more of a low-tempo occasion, where people might be sitting down for a drink with friends. For big nights out, RTDs really come into their own.”
The challenge from other drinks such as flavoured ciders and spirit beers has even caused RTDs to cross the boundaries into other categories to broaden their appeal — most notably WKD with its recent launch of WKD 1 — a 15% ABV shot.
But for all the positivity from brand owners, there’s no getting away from the fact that the RTD market is declining faster than many other drinks categories in the on-trade.
“The rate of decline has slowed considerably during the past 12 months,” adds Carter, who claims that increased marketing support, including WKD’s sponsorship of The Only Way Is Essex, has led to an easing of the pressures.
Carter thinks RTDs are in tune with the times, given the alcohol market’s fascination with flavours.
WKD has augmented its core range with limited editions, introducing a Brazilian variant for last year’s World Cup. It was followed by a Vegas edition earlier this year.
“Flavours are a vibrant trend globally in the alcohol market, and one that is going to continue,” Carter says.
“The interest in limited editions doesn’t mean there’s not a role for pure new product development, but the Vegas limited edition will give us the opportunity to offer our regular consumers something different and the chance to talk to new consumers about the brand in the on-trade,” she adds.
While limited editions are keeping WKD on the boil, Edrington’s Ginger Grouse has shown how completely new innovation can make an impact, especially when it has the backing of a well-known spirit brand and taps into one of the big flavour trends of the age.
Grouse has rapidly risen to number seven spot in the category from a standing start, but another success story in RTDs has been based on the rebuilding of a retro brand, whose target consumers from its first appearance on the market are now in their 40s.
CGA figures suggest Global Brands has successfully breathed new life into Hooch, though its recent market gains are in contrast to the fortunes of sister retro brand Reef.
Marketing director Simon Green acknowledges decline in the category but says RTDs have strong sales among students and other 18 to 24-year-olds and “must not be overlooked”.
He adds: “RTDs remain important for the trade. Global Brands is investing heavily in innovation, introducing new flavours and pack formats, extending drinking occasions and the target market.”
Green says that attention to detail will help pubs make more profit from RTD sales. It may no longer be enough to slide the bottle across the bar and expect to have a satisfied customer.
“Being in touch with consumer trends is key,” he says. “However, it’s important to remember that what the consumer is looking for [in products] hasn’t actually changed all that much.
“What has changed is consumer expectations and the way they want products to be presented and served.”
Across its RTD range, Global Brands has been trying to create PoS and serving vessels that are right for its audience, says Green. “These include sand-castle buckets, pitchers, pint cocktails and fishbowls, which really inject an element of fun and add to the big night out image that these brands portray,” he adds.
This speciality of serving rituals has been taken up by WKD as well. Its past activity has included cocktail pitchers in the shape of traffic cones and witches’ cauldrons.
Such items certainly help to get RTD brands noticed in venues and go some of the way to help licensees meet the challenge of how to get packaged products working to maximise returns from the category.
Developing cocktail ideas around products like WKD are another way of doing this, suggests Carter.
“Using RTDs in cocktails has proved to be a great opportunity, particularly for bars that want to produce consistent drinks that are easy to make and provide a fast speed of service,” she explains.
“They work really well at big social events and we’ve provided the trade with recipes, jugs and other serving vessels to help them make the most of the opportunity,” Carter adds.
Green says original cocktail serves have helped to make VK a popular student brand during the years.
“Each of our brands has a clear audience and consumption occasion,” Green adds. “We’re looking at SKU [stock keeping unit] innovation and development across all brands. Flavour innovation
continues to be key, along with new serving vessels.”
RTDs may have a had a tough time in recent years, but the commitment of the big brands to keep the category front of mind with customers isn’t in doubt.