The Morning Advertiser (MA) spoke to leaders of the RTD world to find out how operators can tap into these growing trends and boost sales within the category.
Craig Chapman, head of brand at Global Brands, which distributes VK and Hooch, told The MA recognising the market potential of RTDs and ensuring availability and a well-curated range was essential for generating sales with younger drinkers.
“By leveraging sales data and industry insights, pubs can make informed decisions regarding product selection, stocking strategies and promotional activities to ensure strong sales year on year,” he said.
In addition, as consumer habits shift, in particular among Gen Z, RTDs are well placed to help engage younger drinkers and encourage increased dwell time and spend, Chapman noted.
He continued: “Recognising the considerable market potential of RTDs and ensuring the availability of a well-curated range is essential for generating sales among younger drinkers.
Relaxed atmosphere
“One key trend is the transition towards more pub-centric social outings, where emphasis is placed on socialising with friends in a relaxed atmosphere.
“To cater to this, pubs can offer innovative and interactive experiences, for example, games like ‘Hooch Pong’, that encourage group participation, spend and prolonged dwell time while creating experiences that see those customers return time and time again.”
The category can also appeal to those looking for lower ABV serves, Chapman added, as 23% of younger drinkers have reduced their alcohol intake last year, according to data from the Portman Group.
He explained: “With increasing awareness of responsible drinking habits, consumers are drawn to RTDs with lower ABV, which offer a more moderate drinking option without compromising on taste or enjoyment.”
Though the head of brand advised providing a broad range of flavours and ensuring maximum visibility was essential to optimise growth within the category, for example, through happy hours, PoS materials or strategically placed chalkboards and fridges.
He said: “RTDs have established themselves as a fundamental component of the on-trade landscape with certain classic flavours becoming indispensable staples.
“However, there's a noticeable shift in preferences towards a broader spectrum of flavours beyond the traditional offerings.
“Keeping these well-known brands behind the bar and featured on menus can encourage further exploration of a drinks range."
“Consumers are increasingly seeking novelty and variety in their drinking experiences, prompting them to explore new, daring flavour combinations.”
Data from CGA by NIQ showed the RTD category was worth £213m in the year to 30 December 2023, with pubs having made up half of its value (£106m).
While the category, as a whole, was in decline during this period, attributed to consumers moving away from traditional alcopop brands and economic challenges across the late-night sector, there were pockets of growth for RTDs in 2023.
Hard seltzer brands, in particular, and new product developments within the alcopop sub-category proved popular, according to CGA.
The number of consumers opting for RTDs when drinking out of home dropped by 2 percentage points during this period against 2019, from 5% to 3%, showing innovation is key to boosting sales in pubs.
A key development for RTDs in the on-trade has been the introduction of draught cocktails, including those from Diageo, which includes Gordon’s Pink Martini, Smirnoff Passion Fruit and Espresso Martini as well as Captain Morgan Strawberry Daiquiri.
Quality drinks
Diageo head of category development Jennifer Runciman explained draught RTD serves, such as cocktails, are a great way for operators to ensure “quality and speed of service”.
Runciman continued: “They provide pubs the opportunity to help drive sales and increase profit margins, all while guaranteeing consistency of taste and presentation for each serve.
“Operators can tap into the rise in popularity of cocktails using draught serves that create a perfect drink every time in less than 10 seconds.
“This is particularly valuable for those that may not have the expertise among the staff or the time to be creating cocktails from scratch.”
As well as stocking a broad range, Runciman advised the brands on offer in pubs “play a key role” in driving sales, especially as customers continue to be “conscious” of their purse strings as the cost-of-living crisis continues.
“People want to invest in quality drinks and brands they know they will enjoy,” she said.
"The overall quality of RTD serves has significantly improved in recent years"
“Keeping these well-known brands behind the bar and featured on menus can encourage further exploration of a drinks range.
“Merchandising the back-bar fridge and showcasing the range will help to enhance visibility, especially when stocking recognisable brands.”
In addition, Runciman told the MA, publicans should regard the back-bar fridge “just as important” as the main bar back for displaying the drinks and brands on offer.
As well as saving time at the bar Abby Matthews, director of the Cocktail Co, laid out the “numerous cost benefits” of RTDs for pubs, from cutting staff costs to preventing waste.
“Not only are RTDs cost-effective in themselves but stocking them can also drastically increase your speed of service – leading to happier customers who are likely to spend more at the venue if they’re enjoying their experience.
“Moreover, we all know skill shortages are still proving a major challenge for the hospitality industry, so RTDs can make it easier to fill vacancies that would otherwise require highly skilled bartenders, or to cut back on training budgets required to upskill existing staff in cocktail-making.
“In addition, single-serve RTDs in particular can help venues reduce wastage by preventing unused ingredients – helping from both a sustainability point of view but also resulting in cost savings.”
Changing for the better
The co-founder explained Cocktail Co, which creates bar-quality cocktails in shake-and-serve style bottles, retails its products at £3.20 per single serve bottle with a RRP of £9.95, providing a £5.09 cash profit on each cocktail sold.
“While we know many operators aim for a GPM of around 70%, actually, in number terms, this offers a much greater financial return than a sale of a bottled beer or glass of wine”, she continued.
For example, the Craft Cocktail Co claimed more than 2,000 units of its RTD cocktails were sold in just four months at Pizza On The Square in London, which is owned by Salt Tap Brewery.
The brand also told the MA, the Jolly Sailor pub in Davenport, part of the Almond Family Pubs group, has consistently sold over 3,000 units per year for the past three years.
Matthews also explained perceptions around RTDs in the on-trade were “changing for the better” as the quality and variety within the category continued to evolve.
In addition, she urged expanding your offering within the category doesn’t mean customers can’t get the bartender experience they may be looking for, adding many RTD options can be enjoyed as they come or served shaken with a garnish.
Matthews continued: “We have previously seen hesitation from operators who are concerned about the quality RTDs can provide but the tide is now turning as venues realise there are premium options available that don’t compromise on quality.
“The overall quality of RTD serves has significantly improved in recent years, propelled by the rise of craft cocktails made using premium ingredients and innovative techniques to create genuinely bar-quality drinks that consumers would expect from a bartender.”
