RTD Market Continues to Grow, but at a Slower Pace

The global ready-to-drink (RTD) beverage market continues to gain ground within the total beverage alcohol (TBA) segment, despite experiencing more moderate growth compared to the last five years, according to data released on Thursday, October 10, by the IWSR, a leading authority on alcoholic beverage market intelligence. In its 2024 strategic study, the consulting firm projects volume growth across all major markets worldwide, although expansion in some markets has started to slow due to the maturity the category has reached.

The markets driving this growth include Canada, the U.S., Mexico, Brazil, South Africa, the United Kingdom, Germany, China, Japan, and Australia, with volume increases in nearly all of them over the past year, except for Australia, which recorded a slight decline of 1%. Mexico led the gains with an 8% increase, followed by Germany with 4%. These figures reflect a shift in trends after a period of double-digit growth rates between 2019 and 2023 in markets such as the U.S., Canada, Mexico, China, and Germany.

IWSR anticipates that from 2023 to 2028, all major markets will experience a compound annual growth rate (CAGR), with Brazil expected to lead at 6%, followed by Australia and Germany at 3.5%, and the U.S. and Canada at 3% each. Although the growth pace has decelerated, RTD products continue to gain share within the alcoholic beverage sector, particularly in markets such as Japan, the U.S., Australia, and Canada.

One of the factors behind this expansion is the perception of RTDs as an affordable alternative to other alcoholic beverages such as beer, wine, and spirits. Additionally, innovation in the sector is becoming more efficient as the number of product launches decreases and volumes remain stable, according to Susie Goldspink, Director of RTD Insights at IWSR. The trend indicates that despite the market's maturity, consumers continue to show interest in these products, partly due to their low-alcohol profile and ease of consumption.

IWSR's research shows that 2024 saw a resurgence in the acquisition of new consumers in the RTD segment compared to previous years, particularly in the United Kingdom, where 19% of consumers were new to the category, followed by Germany and Canada at 18% each, and the U.S. at 17%. Globally, 16% of consumers in the 10 main markets were new to the category, marking a significant increase compared to 2023.

On the other hand, the report identifies that the frequency of RTD consumption has increased in some markets, especially in those with a younger consumer profile, although the number of drinks consumed per occasion (consumption intensity) has remained stable. In markets with a more mature consumer base, such as Germany, Canada, the United Kingdom, and the U.S., consumption per occasion tends to be lower, while in markets with a higher presence of young people, the intensity is higher.

The category has also been impacted by evolving preferences regarding the base ingredients of RTD products. While malt-based products are in decline, options based on spirits and wine are driving growth, despite general consumer confusion over the composition of these beverages. Fifty-four percent of buyers mistakenly associate the "hard seltzer" segment with spirits, when most of these products (83%) are actually malt-based.

IWSR's data indicates that brands need to focus on developing local propositions that resonate with the tastes of each market, as products with international appeal have had less success. In this context, building brand loyalty is crucial to staying competitive in an increasingly fragmented and mature environment. However, the report highlights that the influence of flavor as a decision factor for RTD purchases has decreased from 57% in 2022 to 49% in 2024, while the importance of brand has also declined to 29% over the same period, indicating lower loyalty in markets with a wide variety of products.

Regarding innovation, new product launches have dropped significantly in recent years: in 2021, over 3,300 RTD launches were recorded, while in the first half of 2024, the figure was less than 1,000. This phenomenon reflects both a reduced willingness among consumers to try new flavors and a more restrictive economic environment limiting buyers' risk-taking capacity. Instead, familiar flavor options and variety packs are helping sustain growth in many markets, particularly among younger consumers, who continue to show interest in products that offer newness within parameters they are already familiar with.

As the RTD market becomes more consolidated, companies looking to maintain competitiveness must adapt to these new dynamics, emphasizing local consumer connections and tailoring their offerings to the expectations of an increasingly knowledgeable and selective audience.