The latest data from IWSR has shown the pace of innovation in the expanding global RTD market is slowing, as brand owners focus their efforts on growth areas including spirit-based products, premium-plus price tiers and higher-ABV variants.
In a persistently challenging trading environment for beverage alcohol, RTDs offer a much-needed bright spot, with overall category volumes rising by 2 per cent during 2024, according to preliminary data from IWSR, the global leader in beverage alcohol data and insights.
According to the IWSR Preliminary Read, RTD consumption grew in 16 out of the top 20 global markets last year.
As brewers increasingly look beyond beer to explore fresh avenues of growth, and wine and spirits players diversify into the category, RTDs are poised to make further gains in the years ahead.
The category has traditionally relied on a persistent churn of new products and flavours to retain consumer engagement and maintain sales momentum, but there are now clear signs that the pace of innovation has slowed since its peak in 2021.
In that year, more than 3400 new RTD products were launched in the world’s top 10 markets for the category – but by 2024 that figure had dropped to just over 1800, according to IWSR’s RTD Innovation Catalogue.
IWSR senior insights manager – RTDs and no/low alcohol, Susie Goldspink, said after peaking in 2021, new RTD product launches have been declining year on year, while volumes remain steadier.
“The category is becoming less reliant on a never-ending stream of product launches, and RTD innovation is simply becoming more efficient,” said Goldspink.
Hard seltzers continue to fade
In 2021, one in every three new RTD launches was a hard seltzer, but in 2024 that figure dropped to one in nine. The chief beneficiary has been the FAB segment (Flavoured Alcoholic Beverages), which accounted for 16 per cent of launches in 2021, but 28 per cent in 2024.
Meanwhile, the cocktail/long drinks segment has cemented its leadership position, expanding from 38 per cent of new launches in 2021 to 42 per cent last year. Also notable is the growth of no-alcohol RTDs, which accounted for 6 per cent of launches in 2024, up from 3 per cent in 2021. Wine spritzers/coolers also expanded their share, from 4 per cent in 2021 to 7 per cent in 2024.
“RTD innovations by category continue to fluctuate,” says Goldspink.
“In terms of launch numbers, hard seltzers have fallen behind FABs since 2023, with cocktails/long drinks continuing to lead across the review period.”
Spirit-based RTDs drive innovation
The decline of malt-based hard seltzers has coincided with dynamic growth for spirit-based RTDs: in 2021, 34 per cent of RTD launches in the top 10 global markets were malt-based, declining to 18 per cent in 2024; over the same timescale, the share of spirit-based launches has risen from 55 per cent to 67 per cent.
This trend is also apparent if we narrow the focus to hard seltzers. In 2021, three out of every four new hard seltzer launches had a malt base, declining to 59 per cent in 2024; meanwhile spirit-based hard seltzers’ share of innovations has lifted from 22 per cent to 40 per cent.
“Traditionally malt-based categories, such as hard seltzers and hard teas, are undergoing a switch to spirit-based products, premiumising the offering as consumers become more aware of base and the quality associated with spirits,” said Goldspink.
“The establishment of an easy-to-drink, lower-ABV spirit-based category has now spawned another innovation race, although much smaller than that for malt-based hard seltzers.”
Premiumisation pauses after recent gains
Premium-and-above innovations in the RTD category peaked in 2023 amid signs that brand owners are reacting to more difficult market conditions and the pressure on disposable incomes by introducing lower-priced entries to the market.
In 2021, 58 per cent of new RTD launches were premium or above, rising to 61 per cent in 2023, before falling back to 53 per cent last year. At the same time, the value price tier – which had dwindled to only 7 per cent of launches in 2023 – regained some ground to hit a share figure of 15 per cent.
“Despite this correction, the majority of RTD innovations continue to target the premium price band,” said Goldspink.
“This is due in part to a shift in product mix away from more affordable hard seltzers in some markets, and from FABs in others. It is further driven by premiumisation within categories and the rise of spirit-based products within traditionally malt-based categories, as well as inflationary pressures.”
Some markets, such as Germany and the UK, skew strongly to higher-priced innovations. In 2024, 90 per cent of new RTD launches in Germany were premium-plus, while in the UK the figure was 74 per cent.
Higher ABV levels pique interest
Despite the widespread moderation trend, there are clear signs that some consumers are gravitating to higher-strength products, spawning a succession of new launches and line extensions of lower-ABV RTDs.
In 2021, 51 per cent of new launches in the top 10 markets fell into the >3-5% ABV tier, but this share figure fell to 41 per cent in 2024. Over the same timescale, the proportion of launches at >5-7% has risen from 18 per cent to 22 per cent, while the share for >7% has increased from 25 per cent to 29 per cent.
This shift has been particularly notable in the US and UK markets. In the US, the proportion of new launches above 5% ABV has risen from 48 per cent to 55 per cent between 2021 and 2024, while for the UK it has gone up from 53 per cent to 72 per cent.
“Although we live in an era of increasing moderation, higher-ABV offerings are providing more choice to RTD consumers,” said Goldspink.
“They may also help to retain people in the category, with popular brands increasingly offering a higher-ABV variant to their core expression.”
Fruit flavours rule, but with local variations
While the RTD category has historically been a hotbed of flavour innovation, the tried and tested continues to spearhead new product introductions around the world, with lemon – and, to a lesser extent, lime – to the fore.
Across the top 10 markets, lemon accounted for more than 8 per cent of new RTD product launches in 2024, up slightly on 2021, with the relatively low percentage indicating the fragmented nature of the RTD flavours space. Lemon or lemonade flavour innovations were especially strong in China, Germany, Japan, Brazil, Canada and Australia during 2024.
But there are notable regional variations: passion fruit was the leading new product flavour in the UK last year, while coffee and mango tied for first place in Mexico.
Meanwhile, in the US, pineapple overtook lime as the most popular new product flavour in 2024, with 6 per cent of launches. Pineapple’s popularity in South Africa – where it matched lemon’s 9 per cent of new launches last year – also helped it to become the second most used new product flavour in the top 10 markets.
