As consumers around the world were stuck in their homes for months on end in 2020, the ready-to-drink (RTD) cocktail category soared as consumers looked for ways to still enjoy bar-quality cocktails.
And while most spirits categories have begun to slow the pace of growth compared to the peak pandemic period, RTDs have continued to outpace last year. The category was up 163% in the off-premise for the four weeks ending May 1, reports Nielsen.
So whether you’re thinking about extending your existing brand to include an RTD or launching an entirely new RTD brand, here is the best advice from our experts on Park Street University.
Adding an RTD Product Isn’t Something to Take Lightly
Adding an RTD is a major commitment for wine and spirits producers and much more involved than simply a line extension or a new category, according to Mark Shilling, a partner at Big Thirst Consulting and former president of the American Craft Spirits Association. Wineries and distilleries have plenty of stills and tanks, but additional equipment such as brite tanks, brew kettles, a commercial juicer, pasteurization system, or a canning line may be necessary for RTD production.
Similarly, there are new production techniques that will come along with the creation of an RTD you intend to scale, including getting the carbonation and mixology correctly. Brewers are familiar with ways to control diastaticus, a brewer’s yeast that can cause a can to explode if not controlled properly, but it’s not typically something a distillery would come into contact with.
“It’s not something you can decide to do at a small scale and play around with it a little bit. Everything about this is like creating an entirely new business.” says Shilling.
Listen to Your Consumers
L.A.-based Greenbar Distillery’s decision to launch an RTD was born of a failed attempt to use cocktail-making classes to increase bottle sales.
“It finally dawned on us that people love to drink, they just hate to make that drink,” says Melkon Khosrovian, CEO of Greenbar Distillery. “The re-revolution that took place 20 years ago to reintroduce high-quality cocktails to the public—first through speakeasies and then mixology bars, and pretty much now any corner bar—stops more or less for most people at the home. They’re too tired, too busy, or too challenged to make those drinks at home.”
Let Your Can Do the Talking
In 2018, Cardinal Spirits launched an RTD line inspired by the most popular cocktails in its tasting room. Unlike with 750ml bottles or cocktails, cans can travel with consumers and are more likely to be photographed on social media at the pool, at a party, on a hike etc.
“Our fans are now our brand ambassadors, effortlessly helping tell our story and sharing images of our cans,” says Erica Sagon, the Director of Communications for Cardinal Spirits.
By 2020 the RTD offering was the distillery’s No. 1 product by volume.
Leverage Your Successes to Create More Opportunities
LIQS, a premium shot RTD that launched in 2014, but sold to E&J Gallo earlier this week, grew its brand by owning the festival circuit. Instead of paying expensive sponsorship fees at festivals, LIQS was able to get into events through concession sales where they sell thousands of individual shots per event. “Always, always try to speak to the beverage buyer and the concessionaire, not brand partnerships because their first question is ‘What’s your budget,’” says LIQS Founder Michael Glickman.
Following one of the brand’s first festivals, the LIQS team brought in a professional photographer and made a book that detailed the margins and sales potential festival partners could make if they brought in LIQS.
“The point of this is… leverage relevant success to build up case studies to create more opportunities,” says Glickman. “Fast forward six months after we did our first festival, we had 20 festivals under our belt and it almost became a no-brainer. Whoever didn’t say yes to us, you’re an idiot.”