NATIONAL
LIQUOR NEWS – November 2005
The
rise and rise of RTDs by Gordon Broderick
If you walked into a bottle shop ten
years ago you would have walked past the boxes of wine, past the casks
and towards the fridge at the back with the beer. The fridge space
would have been dominated by the traditional stable of beers, with
perhaps a shelf or two of ‘imports’. Nestled awkwardly somewhere between
the ‘imports’ and ‘wine coolers’ may have been a few lines of Ready
to Drink (RTD) beverages.
What a difference ten years makes! If you walked into that same bottle
shop today several windows of the fridge would be entirely dedicated
to RTDs.
Without a doubt RTDs have been the most exciting and innovative product
to come onto the alcohol beverage market for some time. In fact, RTDs
have established themselves as a separate alcohol beverage category
in addition to the traditional three beer, wine and spirits.
Market growth of RTDs over the past decade has been phenomenal. DSICA
estimates that from 1995 to 2004 the RTD market has grown by over
400%. This growth of course comes from a low base, but nevertheless
the category’s performance remains impressive. The growth of RTDs
is all the more remarkable considering that the past and present tax
arrangements place RTDs at a disadvantage compared to beer.
RTDs now make up around 9.2% of the total alcohol market, and DSICA
estimates that RTDs sales in 2005-06 will be around $2.2 billion.
DSICA also estimates that growth in the RTD category will be 5.2%
over 2005-06. This is a sign that the category is maturing but is
still impressive given that other beverage categories have been in
decline for a number of years.
RTDs appear to have burst onto the scene in relatively recent times,
however their history goes back to 1962 with the introduction of UDLs.
In fact, some credit the Australian industry with having invented
the RTD.
While UDLs have stood the test of time, significant growth in RTDs
did not occur until the mid-1990s. By sales volume, the majority of
RTDs build on the tradition of classic mixed drinks such as bourbon
& cola, rum & cola, and gin & tonic. However, the RTD category has
also seen the development of a new and dynamic range of other beverages,
which resemble cocktails rather than the traditional mixed drink.
Parallel to the rise and rise of RTDs has been the growth in popularity
of cocktail bars, particularly in inner-city areas. In short, cocktail
bars are back!
The new century has ushered in a new type of chic and sophisticated
cocktail bar, sometimes located in basements, converted warehouses
or back lanes. A new generation is rediscovering classic spirits,
liqueurs and cocktails that their baby boomer parents enjoyed in the
swinging sixties. And while the Manhattan, Bloody Mary, Long Island
and Martini remain firmly on the list, a new generation of mixologists
now offer the Vespa, Agent Orange and Bongo Rhythm, and thanks to
Sex in the City, the Cosmopolitan.
Will RTDs ultimately make up 15%, 20% or more of the alcohol beverages
market? It is impossible to say. But one thing is certain: the consumer
has firmly established the RTD as an important and exciting product
in the Australian alcohol beverage market. DSICA is also pleased to
see the resurgence in interest in classic spirits, liqueurs and cocktails.
