The RTD and low-ABV categories are taking the market by storm
While the biggest players in the alcohol market are counting losses after the challenging pandemic year 2020, the decay is emerging into a category that is winning more and more consumers, even in such a difficult time for the industry. IWSR, a leading agency researching the alcohol market, identified them as the key trends in 2021. I am talking about the RTD (Ready to Drink) category, i.e. ready-made drinks and cocktails, as well as the low-ABV category, i.e. low-alcohol spirits.
How do increases in these categories relate to the Scotch whisky market, and why is the increase in popularity beneficial for the industry?
The Ready-to-Drink (RTD) category is the only alcoholic beverage sector expected to grow in 2020, with a forecasted growth volume of 43%, according to an IWSR analysis. In the US alone, which is the largest RTD market in the world, the sector is expected to see a volume increase of 35.3% of the Compound Annual Growth Rate (CAGR) in 2019-2024. Non-alcoholic "spirits" are also projected to increase, but at a slightly slower pace.
The Ready-to-Drink (RTD) alcohol category, which includes seltzers, flavoured alcoholic beverages and ready-made smoothies, is growing rapidly in leading markets. While there are clear differences between markets, it is clear that these products are growing in popularity as consumers, especially younger ones, are looking for convenient and innovative options. It is also associated with the growing popularity of a healthy lifestyle and the desire to enjoy drinking beverages with a lower alcohol content. The answer is the growing number of RTD and low alcohol options on store shelves.
Many brands of Scotch whisky incorporate these trends into their strategies, a good example of which is the launch of the first Ballantines with a 20% alcohol content on the Spanish market, as well as the numerous ready-to-drink products launched by Scotch whisky producers.
It might appear that these categories have very little to do with the prestigious segment of single malt Scotch whisky, but finished products with lower alcohol content can be very important to the development of the premium Scotch whisky market in the coming decades. They can be the first step in starting the adventure with Scotch whisky, which is particularly important for this category, for which one of the biggest challenges is to increase awareness and interest among young recipients.
According to experts, the RTD category could help stimulate the next wave of growth of aged spirits such as Scotch whisky as it adapts to the growing demands of young consumers who shop in terms of convenience and flavour innovation. RTD offers whisky brands a great chance to establish contact with new recipients who, after becoming familiar with the offer of given brands in cheaper options, may be interested in reaching for more and more expensive products in a few years' time.