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RTDs’ Rise Propelled By Mike’s, Twisted Tea

July 3, 2012

Proliferating flavor options and the growth of segments like hard lemonades and teas have buoyed the ready-to-drink (RTD) beverage category in the U.S. market lately. RTDs rose 2.3% to 69.8 million (2.25-gallon) cases last year, according to Impact Databank. But growth is uneven to say the least: most of the top players are either advancing or declining at double-digit rates.

Mike’s Hard Lemonade, the U.S. market’s top RTD brand, increased 14% to 18.3 million cases last year. Andy Horrow, CMO at Mike’s Hard Lemonade Co., points to three trends driving RTDs. “There has been a real blurring and blending of categories,” he says. Horrow also notes that the introduction of RTDs in cans has helped expand consumption into new venues both on- and off-premise. Lastly, he highlights the popularity of mixed drinks as contributing to the segment’s success. “As traditional beer has lost share to mixed drinks, the RTD category has taken advantage by offering the mixed drink taste premixed,” he concludes.

Seizing on this trend, Mike’s launched its new Mike’s On the Rocks cocktail-themed variant in April, which comes in Hurricane and Long Island Iced Tea flavors packaged in 16-ounce canned four-packs. The company also revamped its Lite offering this year, which comes in Lemonade and Cranberry flavors and claims to be the first 100% naturally sweetened RTD of its kind.

Hard teas have also been making headway. Mike’s has a Hard Iced Tea variant that has performed well, as does Boston Beer Co. with its Twisted Tea brand. Launched a decade ago, Twisted Tea has seen double-digit growth for the past two years, earning consecutive Hot Brands Awards in 2010 and 2011. In 2011 Twisted Tea grew by 20% to 2.4 million cases. Food, drug and convenience store venues have been especially strong for Twisted Tea, with its Original and Half-and-Half flavors both rising by upwards of 40% in those channels over the past year. Anheuser-Busch has also been active in the category, introducing Margaritaville Spiked Tea and Lemonade in 2011. In its first year, the brand depleted 580,000 cases, earning a Hot Brand Award.

Meanwhile, RTD offshoots from prominent spirits brands like Smirnoff and Jack Daniel’s have achieved mixed results. Smirnoff Ice fell 12% to 11.7 million cases last year, but the newer Smirnoff Premium Malt Mixed Drinks line (which recently added its fifth flavor, Screwdriver), has fared better. Sheila Stanziale, president of Diageo-Guinness USA, says recent addition Smirnoff Ice Black, which comes in 16- and 24-ounce cans, will help address consumer “demand for a higher-abv, masculine option for Smirnoff Ice,” in an effort to increase the brand’s momentum.

Brown-Forman’s Jack Daniel’s RTDs have also faced challenges, with its Country Cocktails range down 18% to 685,000 cases last year. But like Smirnoff Ice, the Jack Daniel’s RTD range is being reloaded with newer variants like Jack & Cola, Jack & Ginger and Jack & Diet, which are being marketed in 12-ounce aluminum bottles and in 12-ounce cans in select markets, in hopes of attracting new consumers.

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