The Drinks Editor says
While cider has become the new weapon of choice for drinkers, old favourites RTDs are struggling. Drinks editor Adam Withrington asks whether there still is a future for the RTD.
It hasn't been a great couple of weeks for Diageo.
Recent AC Nielsen results from Ireland have shown a 6.3 per cent MAT volume downturn for Guinness. Many say this is the result of the smoking ban and may be one of the reasons the company is testing a Mid-Strength version of the stout in Limerick - it needs to attract younger drinkers after all.
But its Irish woes don't stop there. Across the Irish Sea Diageo distributes a number of brands it doesn't own, such as Budweiser, Carlsberg and Smithwicks. And the numbers here are not good either - with Carlsberg down 6.8 per cent, Smithwicks down 9.8 per cent and Bud in double digit decline at 10.2 per cent.
Last week the drinks giant announced its interim results and in terms of its performance in Great Britain the one thing that really stood out, way above any woes it might be suffering in the beer market, was its worrying performance in the Ready To Drink (RTD) sector.
Overall RTD sales have suffered a 22 per cent slump while Smirnoff Ice, for so long the category leader, has endured a 20 per cent decline in the last year.
These statistics are confirmed in AC Nielsen's report for October and November, which showed an 18 per cent downturn in the on-trade.
Last year The Publican published a series of articles on the RTD market and while there was acceptance from trade figures that the astonishing growth seen in the late nineties was never sustainable, the general consensus in trade was that RTDs still had a big role to play. These people must now be doubting their optimism. Brand owners and retailers are seeing double digit volume decline month after month and there appears to be no let up.
The fact is the British consumer has moved on. The niche in the market for that sweeter drink to break up an evening appears to have been filled rather neatly by packaged cider.
While RTDs have been dying away, packaged cider has seen a remarkable boom, with the latest Nielsen figures showing an 89 per cent year on year growth up to November 2005.
And while that has happened the high street market has been stagnating. RTDs more than any other category depend on high street and student venues. It is believed that RTD sales made up more than 20 per cent of total drinks sales in NUS and young persons' venues in the early 2000s. That is a staggering amount.
A stagnation in the high street, which is undoubtedly happening, can only mean bad news for the RTD sector as a whole.
And yet despite its problems in Ireland and with RTDs in Britain Diageo is apparently committed to spending large sums of money on new product development in the RTD category (with one of them apparently set to be a cider-style RTD).
Perhaps the drinks giant knows something I don't. Because unless the British consumer starts to rediscover its appetite for the alcopop, the Ready To Drink sector may be Ready To Die.
