Remember when ready-to-drink cocktails took off? When White Claw ruled the landscape, inspiring the launch of dozens of other hard seltzer brands into the market?
The ready-to-drink (RTD) category has transformed in waves since then, welcoming in flavor innovations and a wealth of new brands. It’s estimated that by 2030, the spirits-based RTD segment will double in both value and size.
A few years back, Beam Suntory (owner of Maker’s Mark, Jim Beam, Courvoisier, and more) acquired and re-launched On the Rocks (OTR): a brand of pre-mixed cocktails leveraging spirits from the beverage giant’s portfolio. Things like a Knob Creek Old Fashioned, an Effen Vodka Cosmopolitan, and a Hornitos Margarita, all packed into small and large bottles and best served poured over the rocks.
Since the launch, the spirits giant has doubled down on the RTD category, expanding On The Rocks, launching Delola with Jennifer Lopez and relaunching -196, a popular Japanese brand.
What’s next for the category, and where is one of the largest beverage giants in the world steering towards? Here are Beam Suntory President of North America Jessica Spence’s insights on the future of the category.
Kate Dingwall: It’s been a few years since OTR launched. How has the reception been? How has the brand — and the overall RTD category — evolved in that time?
Jessica Spence: We’ve found that the RTD space is a much more innovation-driven category than regular spirits. Consumers have different expectations. They love to explore and they expect to see new things quickly.
When we launched, it was great to be able to play off established brands that people knew. Consumers know that cocktails are hard to make and they tend to be dubious as to whether an RTD can offer the same quality. When people saw brands they recognized —Effen Vodka, Basil Hayden — it offered familiarity. We now have one of the strongest repeat rates in the RTD world.
And, people are drinking across our range. Consumers are introduced to the brand via our Cosmo or Old Fashioned, and then they move across the range, choosing products that fit with different moments. We’re even bringing in wine drinkers who want the occasional cocktail.
KD: How is your brands going to continue capturing new drinkers?
JS: OTR has become the pillar of our RTD business. We now have the core line, and we’ve been expanding to include new limited-edition flavors, like a Midori Sour — it’s got the most amazing green color. It’s stunning, with a gorgeous flavor.
This week, we have a white negroni coming out, capitalizing on a trend we’ve seen gaining traction in big city cocktail bars. We’ve been looking at hitting those high notes with flavors and recipes that are newsworthy and popping on the bar scene — exploring what bartenders are excited about. Earlier this year, we released an espresso martini. Espresso martini menu penetration is up triple digit growth in the West and Midwest, which informed our team’s development & launch of OTR espresso martini last year.
KD: Over the pandemic, we did see cocktail culture permeate across the country as folks were stuck at home.
JS: When I moved to the United States, I was struck by how developed cocktail culture is here compared to other markets. And over the pandemic, the level of experimentation we saw from home drinkers who probably hadn’t even tried a negroni was beautiful. They were missing that ritual and the treat at the end of the day that is needed during Covid-1. Overall, the industry saw products like bitters and liqueurs doing really well — we saw people starting to play with recipes at home and experiment with garnishes.
That’s the lovely thing with OTRs — the look and feel is very premium, but convenience is still at the heart of the RTD. Pour and serve.
KD: Which leads to another major trend of the last few years: premiumization.
JS: Convenience is almost table stakes. Consumers are asking: what are you giving me on top of that? We have a large portfolio of premium brands. And while the market is a little bit more turbulent this year, the premiumization trend is incredibly strong. That’s one of the most exciting parts of the category. Historically, people haven’t considered ready-to-drink beverages a premium category.
There’s so much growth potential and it’s an incredibly fast-paced category. But we haven’t even started the premiumization journey. Consumers are clearly looking for more. They’re looking for more interest, more complexity, more sophistication, and more quality.
KD: They’re looking for RTDs that match all moments — not just the crushable, spritzed RTDs for summer.
JS: We’re seeing the occasions people are buying for are slightly different to what we see in other RTDs. For example, most RTDs perform poorly over a holiday period. You’re not drinking a canned drink at Thanksgiving! But OTR fits — you can pour and serve cocktails that match the occasion. And you’re sipping them through the summer — drinks like Old Fashioneds and Manhattans work well in the fall, while margaritas and Mai Thais fit the summer season. A lot of RTDs are great at pool parties, bbqs, and those moments, but die off outside of those occasions. It’s lovely to see that OTR has that year-round appeal.
KD: How are you translating these insights to some of Beam Suntory’s newer RTD brands?
JS: We’ve also had a more entrepreneurial approach with Delola, partnering with Jennifer Lopez. Internally, we were looking at the landscape, and we saw a lot of energy for spritzes.
The third product we’re testing and learning with this year is -196. Both OTR and Delola are US-born and bred. 196 is one of our big global powerhouses — the brand came out of Japan and received phenomenal success, then we launched in Australia to the same excitement. We’re currently launching in the United States. It’s the first time we’ve taken something globally and built off our unique bespoke technology — if you bring the fruit down to -196, it better concentrates the flavors.
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