The Rise and Future of the Ready-to-Drink Beverage Industry

The ready-to-drink (RTD) beverage market has experienced explosive growth in recent years, driven by consumer demand for convenience, variety and innovation.

The RTD beverage sector, which encompasses a diverse range of products from hard sodas to canned wines and cocktails, was the only major category in the global alcoholic beverage market to record volume growth in 2023, increasing 2% in volume and 6% in value, according to beverage market research firm IWSR. This trend is expected to continue, with both volume and value expected to grow at a compound annual growth rate (CAGR) of 3% between 2023 and 2028.

Evan Burns, co-founder and CEO of The Finnish Long Drink, attributes much of the category’s success to the unique appeal and authenticity of certain brands.

“We think customers are tired of innovation being about new flavors,” Burns says. Forbes“The innovation that we see winning and that we believe will drive long-term category owners are brands that innovate on the best route to market (easy to find at the right price for the target customer) and the best brand experience that customers want to align with.”

Inspired by a drink created for the 1952 Helsinki Olympics, the Finnish Long Drink recipe was developed in Finland. But the company was founded in 2018 in New York and is produced upstate in Utica, New York.

Burns clarifies that he doesn’t consider the Finnish Long Drink to be an RTD in the sense that “it’s not a cocktail that you can mix at a bar and put in a can for convenience.” While there is no official definition, RTDs generally refer to canned alcoholic beverages that are pre-mixed and ready to be consumed immediately.

“It’s a different thing, but people like it because of the flavor and the authenticity of the story,” Burns says.

Regardless, Burns points out that consumers are increasingly willing to pay more for products that offer better taste and a compelling story.

“I think the ready-to-drink category will continue to grow as customers demonstrate they are willing to pay more for better-tasting products, but I think brands that lack authenticity or soul will be seasonal flashes in the pan rather than building relationships with customers in the way a brand like Guinness has for hundreds of years.”

Jake Bilbro, winemaker and creator of Revelshine in Sonoma County, California, also sees significant potential for innovation in the ready-to-drink beverage sector, particularly in how wine is presented and consumed. Revelshine offers wine in aluminum bottles, a move that Bilbro says meets consumer demands for durability and portability.

“Our packaging allows consumers to enjoy quality wine in all sorts of new environments, and every bottle of wine purchased in aluminium rather than glass also delivers significant carbon savings,” Bilbro says. Forbes.

Chris Budzik, a market analyst at IWSR, a beverage research firm, highlights the role of innovation in the rise of the ready-to-drink market. He notes that the pandemic has played a significant role in accelerating the popularity of sparkling alcoholic beverages, which has in turn spurred innovation in other ready-to-drink subcategories, such as canned cocktails.

“Emerging brands need to offer something new to stand out in an increasingly crowded market,” Budzik says. Forbes“Continued, yet targeted, innovation is essential to staying ahead of the curve in the eyes of consumers.”

Budzik notes that sustainability and health consciousness are becoming increasingly important factors for consumers.

“Hard sodas are often touted as low-sugar, low-calorie, and gluten-free. Hard kombuchas tout their digestive health benefits,” Budzik says. “Not only are aluminum cans more convenient to carry than glass bottles, they also have a smaller carbon footprint than single-serve glass bottles.”

He also identifies the on-premise channel (bars and restaurants) as a significant untapped opportunity for ready-to-drink beverages. “As bars and restaurants continue to struggle with staffing shortages, the ability to quickly serve a quality cocktail could make ready-to-drink beverages more attractive to outlet owners,” Budzik says.

Despite its rapid growth, the ready-to-drink beverage market faces challenges. As the category becomes increasingly saturated, brands will need to adapt to evolving trends to maintain consumer interest. Evolving consumer preferences, with consumers increasingly seeking premium, healthy and sustainable options, will shape the future of the market.

“Maintaining consumer interest in innovative products will likely be the biggest challenge for RTDs in the coming years,” Budzik says. “Some of the recent innovation has focused on tropical flavors and pairing familiar flavors with more esoteric flavors.”

The success of ready-to-drink beverages suggests the category is here to stay, but its future will depend on how well brands adapt to changing consumer demands.

“While there is some competition from traditional bottled wine and other alcoholic beverages, convenience, portability and unique packaging formats act as mitigating factors,” Bilbro says. “I don’t think anyone knows exactly where this is going to go from here, but as long as we continue to prioritize quality and authenticity, I think we’ll be in a good position eventually.”