It’s the fastest-growing category in BWS and volume grew by more than 24% in convenience in the last year – so why is no one talking about RTDs?
By Antony Begley
Ready-To-Drink (RTD) products have a very long and mostly venerable tradition in the local retailing channel. The history of the category has been marked by peaks and troughs as it shifts in and out of popularity among consumers. Mostly the peaks are accompanied by much fanfare in the trade press and a raft of NPD as producers attempt to grab their share. So, with RTDs up over 24% by volume and 16.5% by value in convenience in the 12 months to the end of February [IRI data), why is no one talking about RTDs right now?
The category is performing astonishingly well and at 24.2% growth by volume, it’s comfortably the fastest-growing sector of the wider BWS category. If you talk to wholesalers, there’s a general acceptance that RTDs are on a roll at the moment but there seems remarkably little interest or excitement elsewhere – even among some retailers.
Which is odd, particularly when you consider that the supermarkets aren’t keeping pace. Volumes have actually been falling and were down 13.2% to the end of February, according to that same IRI data. It seems like an opportunity tailor-made for the local retailing channel.
“It’s a strange situation, that’s for sure,” says Andy Ferguson, the man driving the Four Loko brand in Scotland. “Normally with stats that mind-blowing, you’d be expecting to see the trade press running endless articles and retailers beating down a path to your door. To be fair, we are seeing more and more demand for our brand, Four Loko, and we are seeing some amazing growth, but it’s odd that the sector seems to be slow to wake up to the RTD opportunity 2.0.”
So what?
The implications for retailers are fairly clear: consider devoting more space to the RTD category in your chiller and take a fresh look at your range to ensure that you are stocking the most popular lines. The RTD market has changed enormously in the last few years so a little time and effort may be required to ensure you’ve got the right range for your shoppers.
Dragon Soop is the clear leader with sales close to £21m in Scotland and growing at 11%. WKD is also growing at 11% but sits at number three with £10.8m sales. The two growing stars, however, are Four Loko, up 88%, and AU Vodka, up 410%, albeit from a smaller base.
Four Loko’s performance makes it the number-two brand in Scotland with sales of almost £14m a year and a lot of momentum behind it. Additionally, when the Top 10 brands are broken down into individual SKUs, Four Loko White Can 440ml is the fastest-selling SKU in the category in Scotland in the last 12 months, despite having only been on sale for 10 of those months. Four Loko White Can 440ml is also the fastest-selling SKU across the rest of GB too.
AU Vodka is the other rising star of the RTD, particularly on a GB basis. It has contributed almost £21m of the £33.2m total RTD category growth in the year to the end of February, although much of that came from down south. Four Loko is the second-biggest contributor to category growth across GB, adding around £7.4m, with most of that coming from Scotland where the brand was first launched in GB.
“We’re very pleased with the performance of Four Loko in the relatively short time it’s been on the market,” says Ferguson. “The brand is worth £15.7m and that represents year-on-year growth of 94%. We have the fastest-selling SKU in Scotland and across GB and we’re already the number five brand in convenience in GB over the last 52 weeks. Forecourts are a focus for us too where range is all-important and the sector can sometimes be quite slow to react to category developments. And we have big plans, including some great NPD and sponsorship of several large scale music festivals for the third year running.”
NPD frenzy
As mentioned above, most episodes of spectacular category growth are accompanied by fanfare and a wave of NPD. The rise of RTDs hasn’t quite caught the attention of the trade press, but it has caught the eye of producers keen to grab a slice of the action.
“We’ve calculated that there have been 215 new products launched into the RTD category since January 2023,” says Ferguson. “That’s astonishing and it includes 47 own-label launches, although it also includes existing products being moved into PMP packs. That has helped add excitement to a hugely exciting category and these new products have added around £58m of new sales to the category across GB, according to IRI data.”
Many of those products have come from big brands like Absolut, Gordon’s, Captain Morgan and Bombay Sapphire. Jack Daniel’s Whisky & Zero Sugar Coca-Cola 330ml has added over £51m since January 2023, while Gordons & Schweppes Pink Gin & Tonic has added almost £3.8m.
But the RTD specialists have also more than played a part, with AU Vodka Pineapple Crush 330ml adding more than £3.5m and Four Loko White Can 440ml adding more than £3m.
“It’s a hugely interesting time for the category,” says Ferguson. “It means that retailers would be well advised to take the time to satisfy themselves that they have dedicated enough chilled space to the category in-store and that they have the fastest-selling lines in their chillers. Brands like Four Loko, Dragon Soop and AU Vodka are driving the real growth and that’s where retailers whould focus their attention and their shelf space. We’re all aware that chilled space is more expensive than ever so making sure you’re getting maximum sales and profit out of every facing is key.”
Ferguson says this is a “massive opportunity” for c-stores, because the real growth is coming from the channel. He predicts that more NPD will keep piling on the excitement and help retailers drive sales and profits.
Berry good
Launched just last month, Four Loko Dark Berry Burst 440ml is the brand’s latest new flavour and is, according to Ferguson, “already flying”. With an RSP of £3.49, the 8.4% ABV product will help generate fresh excitement and keep building category momentum, believes Ferguson. “The customer base for RTDs has changed and we know that flavours and NPD are key,” he explains. “The Four Loko range started out with just four lines but the range continues to expand and this helps drive trial and brings new customers into the category for retailers.
“We are very aware that retailers don’t have elastic shelves so we will manage our range as we go to ensure that it delivers maximum impact for retailers.”
Clark McIlroy, Managing Director of Four Loko distributor Red Star Brands, adds: “RTDs are enjoying a major period of reinvigoration and the forecast for RTDs is extremely exciting with particular emphasis on at-home occasions and the linked opportunity to drive sales.
“Four Loko enjoys a well-earned reputation for being the go-to drink for those seeking unconventional fun and full-on flavour. Taste is perhaps the top consideration when it comes to RTD preferences so staying ahead of the curve is critical. We’re confident that Dark Berry Burst, with its fresh fruity vibes and big flavour profile, will be the perfect summer pre-mix for all occasions.”
