Consumers can’t seem to get enough of spirits-based RTDs, and producers are obliging, with the category proliferating at warp speed. “Advertising, continued cocktail culture growth, more brands offering more variety, and the increase of at-home consumption are contributing to RTD growth,” says Dan Walski, assistant manager at Mid Valley Wine & Liquor in Newburgh, New York. He notes that category sales are up 35% at the store this year compared to 2020. “The number of available offerings by brand continues to increase and new brands are coming on the market nearly every day,” Walski adds.
Convenience, quality, and variety are attracting consumers. “The selection we carry is just a fraction of what we have tasted through over the last six months,” Walski says. “We try to only select products we truly believe in.” Mid Valley carries 140 RTD SKUs, and top sellers include High Noon Tropical Variety ($19.66 an 8-pack of 12-ounce cans), Jose Cuervo Classic Margarita ($9.75 a four-pack of 200-ml. bottles), and The Spirits Lab Blood Orange Old Fashioned ($41.85 a 750-ml. bottle). “While there are periodically supply issues on certain flavors and types under a brand’s umbrella, RTDs are generally available and there are suitable replacements for out-of-stock items,” Walski says. “Supply has greatly improved in 2021 compared to 2020.”
In Fort Collins, Colorado, Wilbur’s Total Beverage doubled the number of spirits-based RTD selections and increased shelf space dedicated to them in late 2019. The store now carries more than 150 SKUs. “Our RTD sales in 2020 were basically three times the previous year, and we’re not seeing that trend drop to pre-pandemic levels any time soon,” says owner Mat Dinsmore. “Although sales this year aren’t doing quite as well as we did in 2020, RTDs continue to outperform many spirits categories.” The top selling RTDs at Wilbur’s are Coyote Gold Ready To Serve Margarita ($23 a 1.75-liter), Jose Cuervo Classic Margarita ($17 a 1.75-liter), and Chi Chi’s Original Margarita ($10 a 1.75-liter).
The category is gaining support from lawmakers as well. Michigan adopted a law this May allowing the abv of canned cocktails to increase from 10% to 13.5% and permitting them to be sold in 24-ounce cans. In New Jersey, a state Senate bill was introduced in February of this year to lower taxes on spirits-based cocktails below 9.9% abv. Taxes would vary depending on alcohol content.
The Washington, D.C.-based Distilled Spirits Council of the United States (DISCUS) is looking to reduce federal excise taxes on spirits-based RTDs to the same level as beer and allow them to be sold anywhere beer is sold. “If we got the taxation and distribution right in the United States, we would be looking at a 250 million (2.25 gallons) case RTD market,” says David Ozgo, senior vice president of economic and strategic analysis at DISCUS. While taxes vary at state levels, federal excise taxes for a 5% abv spirits-based RTD is 12.7 cents a 12-ounce serving versus 5.5 cents for a same size and abv beer. “Beer distributors have quite an advantage when it comes to taxation,” Ozgo says. “It’s a big issue for us to get competitive tax rates on spirits-based RTDs and allow them to be sold anywhere where beer is sold.”
In the meantime, consumers are flocking to the convenience factor. “The biggest trend is the ability to not do much work,” Dinsmore of Wilbur’s says. “Many new entrants are almost as good as anything homemade or mixed by a bartender and much easier to just pour into a glass with some ice.”
Indeed, RTDs are poised for strong growth. “RTDs will continue to grow over the next few years as more brands look to diversify their product line,” Mid Valley’s Walski says. “On-premise businesses known for their cocktails will expand into RTD offerings and seek avenues of off-premise distribution.”