If you’ve had the pleasure of sipping on a Cutwater Lime Margarita or a Fishers Island Lemonade fresh from the cooler, you know how easy it is to pick up ready-to-drink (RTD) cocktails that taste just as good as something your friendly neighborhood bartender could mix up. With big names like Jameson, Tanqueray and Crown Royal rolling out their own canned cocktails, it’s clear that RTD cocktails are the beverage industry’s sweethearts du jour.
But it wasn’t always this way. In fact, only 10 years ago, malt-based hard seltzers were pretty much the only version of a premixed cocktail you could get your hands on. The story of the RTD category’s rise to fame is filled with tax laws, product packaging innovation and, yes, the hard factory reset on consumer behavior effected by the COVID-19 pandemic.
Come along with us as we chronicle the creation, development and rise to stardom of the RTD cocktail.
To understand how the RTD cocktail rocketed from obscurity to cooler royalty, we have to travel back to 1859. Our story begins with Andrew Heublein, a German immigrant who came with his family to Hartford, Connecticut and founded the Heublein Hotel.1 Andrew was an astute businessman, a quality he clearly passed onto his sons Gilbert and Louis, who began offering bottled cocktails (Manhattans, martinis and the like) at the hotel’s restaurant and bar for guests to take home with them. These ready-to-enjoy cocktails, later dubbed Club Cocktails and sold nationwide, are the grandpappies of today’s White Claws and High Noons.
Club Cocktails had mild success and a few other competitors, like Duet and Party Tyme, but with historical roadblocks like Prohibition and consumers being slow to warm to the idea of a cocktail in a can, RTD cocktails saw modest growth in the 20th century.
We didn’t see the next breakthrough in the RTD cocktail scene until the release of White Claw in 2016, about the same time that flavored, carbonated waters were dominating the beverage aisle. This low-ABV, easy-to-drink malt-based hard seltzer became a pool day and frat party staple, leading to the hard seltzer boom of the late 2010s featuring brands like Truly, Mighty Swell and more.
A major contributing factor to the hard seltzer’s popularity has to do with tax laws. Distilled spirit-based beverages with vodka or any other grain alcohol are taxed higher than brewed beverages like beer and, you guessed it, hard seltzers. The alcohol in most hard seltzers is made from cane sugar that is fermented during the brewing process. This allowed “spiked” seltzer brands to slide onto shelves at a much lower price point than wine or spirit-based beverages AND tout that desired “gluten-free” label to health-conscious consumers.2 These market conditions were the perfect environment for the Claw to have it all.
As for spirit-based beverages, companies weren’t too sure that consumers would go for the higher price point for a beverage category with no strong precedent of market success. It would take something big for brands to take that risk to roll out spirit-based RTDs in full force.
And then in 2020...well, something big happened.
When cocktail bars were off-limits during the pandemic, but consumers still wanted their mixed beverage fix, premixed cocktails were given their moment to shine. At-home consumption wasn’t just a choice anymore, it was a necessity. Thanks to developments in packaging design that improved flavor and big industry news, like Anheuser-Busch InBev’s acquisition of San Diego distillery Cutwater in 2019, the timing was just right for lockdown cocktail lovers’ first spirit-based RTD cocktail to be ridiculously good.3
“Cutwater, known for their authentic style cocktails, was one of the first brands to hit the state. They got off to a slow start due to customers not being educated on what RTDs were, then High Noon made its splash and helped raise the bar by stealing customers from just about every category, improving customer’s knowledge,” said Chad Holloway, Senior Executive Strategist at ABC Fine Wine & Spirits. “This subsequently opened the floodgates to many suppliers from all categories jockeying for a position in a small but rapidly growing category.”
And boy, did it grow rapidly. According to consumer intelligence company NielsenIQ’s RTD market analysis conducted from August 2021-2022, RTD sales were up $63.6 million in 2022 over 2021. Hard seltzers continued to lead the category with 43.4% of total RTD dollar share, but spirit-based RTDs were the fastest growing sub-category at 10.5% dollar share, up 55% over 2021.4
It’s not just individual consumers driving this RTD boom, either. Cocktail bars, stadiums, festivals and other drinking venues have embraced the canned cocktail as a menu item to combat capacity, inventory and staffing shortages. They also speed up the serving process and offer easy to-go options in areas with open container laws. This flips the script on the typical consumer process of discovering an item on-premises (trying a drink with Johnnie Walker at a cocktail bar) and taking it off-premises (buying a bottle of Johnnie Walker to enjoy at home). Thanks to the mid-pandemic RTD boom, consumers hopped on the RTD train from the comfort of their couches, and restaurants and bars followed suit.
And honestly, are we that surprised? Millennials, the same generation that ditched department stores for online shopping and cable for streaming services, are the ones driving the RTD craze.5 Of course they’d go for a pack of four canned mojitos for less than the cost of one at the hip cocktail bar down the street. You can’t deny the RTD’s portability, convenience and, thanks to industry innovations, delectable taste.
“It’s still an exploratory category that consumers are continuing to discover. Consumers are willing to spend a little more for quality cocktails in a can that are spirit-based over malt-based cocktails,” said Brian Thompson, Director of Beer at ABC Fine Wine & Spirits. “Non-beer drinkers are now able to enjoy a vodka seltzer or their favorite cocktail on a boat, golf course or at the pool.”
For that, we think the RTD category is just getting warmed up. We’ll pop a tab to that.
Are ready-to-drink cocktails better than handcrafted ones? Watch to find out.
1 The Intoxicating History of the Canned Cocktail | Innovation| Smithsonian Magazine
2 How the Hell is White Claw Hard Seltzer Outselling Budweiser? (thedailybeast.com)
3 Hard seltzer's popularity propels the rise of the canned cocktail (cnbc.com)
4 Ready-to-drink cocktail trends: What you need to know - NIQ (nielseniq.com)
5 Millennial Spending Habits and Why They Buy (forbes.com)
