RTDs 'here to stay' despite sales fears, says Beverage Brands

Beverage Brands, the owner of WKD and Woody's, has refuted claims that the bubble has burst in the ready-to-drink (RTD) sector.

Amid widespread talk and press reports that the bottom has fallen out of the RTD market, marketing manager Karen Salters has insisted there's a need to gain a better understanding of what is a decelerating sector.

"RTDs are definitely here to stay and the future of the category is far from the rather bleak picture which is currently being painted," she said. "Yes, the RTD category growth has slowed in recent months, but it really shouldn't come as such a surprise and it doesn't warrant the persistent negative comments about its future.

"You really can't expect the frenetic launch activity and phenomenal growth which takes place in the first years of any new category to be sustained indefinitely."

According to Graham Page, consultant for industry monitor AC Nielsen, sales of RTDs are declining at around six per cent in the on-trade.

"Our expectation is that it will continue to fall gradually and that there will be a further shakeout leading to brand casualties," he said.

"RTDs are suffering from premium packaged lagers, wine and spirits and there's evidence in the nightclub sector that more people are turning to vodka and mixers."

Mr Page added any possible recovery will depend greatly on the recovery of high street retailers where RTDs can represent up to a third of all sales.

He added that much of the slowdown in RTDs has been attributed to a reduction in ABV and the decision by some retailers to raise the price of product by between 20 and 50 pence following the hike in tax as part of the 2002 Budget.

Ms Salters, however, argues the deceleration of growth is typical of a maturing market.

"A lot of emphasis has been placed on the direct impact last year's Budget duty increase has had on the RTD category, but this is just one of many other influences which are contributing to the category's performance," she said.

"You aren't going to witness the sheer volume of product launches that have inundated the market over the last eight years.

"The stakes and cost of entry into the RTD market are now a lot higher - new brands will find it increasingly difficult to make their mark without a substantial marketing support.

"It really is a bag of mixed fortunes, and it's misleading to tar the whole category with the same brush.

"Some brands - both established and relatively new - are still showing phenomenal growth rates."