Mixing It Up!

At Spec’s, the beverage alcohol retailer based in Houston, TX, with more than 70 locations throughout the state, premixed cocktail products sell year-round. The number-one type of premixed cocktail at Spec’s is the Margarita. “And Cosmopolitans are such a big hit, they’re not slowing down either,” said Lisa Key, Spec’s marketing director. “People tend to go with brand names they trust.”

“Premixed cocktails,” “prepared cocktails,” “ready to drink” (RTD), “ready to serve” (RTS), “ready to go” and “progressive adult beverage” (PAB): there are a lot of terms for these products and their close cousins, the malt-based RTD brands, such as Mike’s Hard Lemonade and Smirnoff Ice. “RTDs are the single-serve, malt-based brands that can be sold anywhere malt beverages can be,” explained Gordon Chisholm, brand director of Bacardi Flavored Rums, RTS, RTD & Trade Communication at Bacardi USA. “That’s a 43 million case per year market. Ready-to-serve (RTS) products are spirits-based, such as Bacardi Classic Cocktails, Jose Cuervo Authentic Margaritas and TGI Friday’s Margaritas. These are packaged for multiple servings – the biggest size, the 1.75 liter, represents 80% of the volume – and are a 6.5 million case per year market.”

But there is overlap. “At least in our company, we call the single-serves ‘drinks to go,’ and think of it as all the same category: premixed cocktails,” said Sheila Senhouse, brand manager for Malibu Rum at Pernod Ricard USA. Pernod Ricard’s RTD and RTS offerings include the new Malibu Cocktails, two lines of Kahlua products – Drinks to Go and Ready to Drink – and its Seagram’s Gin & Juice.

Firefly Distillery recently launched Firefly Southern Lemonade and Firefly Sweet Tea Lemonade, calling them “ready to drink” products. “We offer the cocktail in a 1.75-liter bottle and a 200 ml 4-pack. This allows us to have shelf space not only on the premade-cocktail shelves but in coolers where we are positioned against the broader category of wine- and malt-based premade cocktails,” said Rebecca Henry, brand manager.

Demographic Trends

While premade cocktails have traditionally been seen as a favorite of female consumers more than male, its sales are actually not that skewed. “The consumer demographic,” said Bacardi’s Chisholm, “is male and female, surprisingly enough. It’s about 55% female.” Pernod Ricard’s Senhouse agreed. “The consumers are slightly more female,” she said, “and are in the mid-range in terms of age, from 25 to 40.”

The appeal of products that can be called “ready to serve” – spirits-based, available in large packaging – is neatly summed up by the slogan for Margaritaville Cocktails, from Gemini Spirits, “Make Friends, Not Drinks.” “The kind of cocktails that lend themselves to a ready-to-drink format are most typically the kind that some consumers find difficult to prepare – like Margaritas, especially flavored Margaritas, like strawberry,” said Michelle Nouvel, brand manager at McCormick Distilling, which is represented in the category by Tarantula, McCormick Long Island Iced Tea and Rio Grande Margarita. “RTDs also are used as a ‘trial’ by some consumers,” she continued. “They may be unfamiliar with a cocktail and buy the 200 ml size to figure out if it is something they would like. Another big use of RTDs is for large groups or parties – which can occur year-round.”

McCormick is especially experiencing success with McCormick Long Island Iced Tea. “It fills a unique niche. People like to serve Long Island Iced Teas, but might not want to keep four or five bottles of white spirits on hand,” explained Nouvel.

Campbell Brown, vice president and director of the Americas for Southern Comfort at Brown-Forman, sees one of her brand’s newest products, Southern Comfort Hurricane, as filling a similar need. “The Southern Comfort Hurricane cocktail stays strong because people love the cocktail and they’re getting the same great cocktail without the hassle of the many ingredients needed,” Brown said.

Nouvel pointed out that McCormick’s Long Island Iced Tea even has a market in the on-premise. “It saves restaurants money because it eliminates overpouring,” she said.

Premium Level Growing

Suppliers and retailers alike say that it is the premium level and above that is growing the most in this market. At Spec’s, for instance, the best-selling premixed Margarita is Jose Cuervo Golden Margarita, made with Jose Cuervo Gold Tequila and Grand Marnier.

Bacardi’s Chisholm cites Nielsen numbers showing that the premium prepared cocktail segment is growing at just under 6%. “This is being driven by a vast array of new products and new packagings,” he said. Other suppliers point out that consumers continue to entertain more at home than on-premise because of the economy, an opportunity for these kinds of products.

Overall, however, the entire category of prepared cocktails is showing a slight decline. “The lower-end is not selling,” confirmed Lisa Key of the retail chain Spec’s.

Contrary to the image ready-made products sometimes have – of being inferior to homemade versions – many consumers of premixed cocktail products are discriminating when it comes to quality. This is one factor in the relative strength of the premium brands. “What we’re seeing is consumers who are a little particular, they want products that are more like ‘live cocktails,’ and are made with higher-end ingredients,” explained Malibu’s Senhouse. In June, Malibu launched its own line of premixed cocktails, Malibu Cocktails – Rum Punch, Caribbean Cosmo and Tropical Mojito. “They have done really well,” said Senhouse. “According to Nielsen, they were the number-one, number-two and fifth best-selling new products in the 13-week period after their launch.”

Bacardi Classic Cocktails added two new flavors to their line in May: the Bacardi Classic Cocktail Pina Colada and the Bacardi Classic Cocktail Strawberry Daiquiri. The Pina Colada is made with coconut water instead of coconut cream. “Coconut water is such a hot consumer trend. It definitely helps it,” said Chisholm, who explains that, because of its use of coconut water, the Bacardi Classic Pina Colada contains zero grams of fat. And Bacardi designed its new Bacardi Classic Cocktail Strawberry Daiquiri to not require the use of a blender to serve. “It was developed as a delicious ‘on the rocks’ liquid,” said Chisholm.

At Spec’s, one of the most popular prepared cocktail brands is SkinnyGirl Margarita. “We can’t keep it in stock,” said Key. SkinnyGirl Margarita was developed by Bethany Frankel, author of the book Naturally Thin and a star of “Real Housewives of New York City.” A four-ounce serving contains 100 calories, is sweetened with agave nectar and contains no preservatives or artificial colors.

Other suppliers have seen the uptick in consumer interest in the quality of premixed cocktails in recent years and have responded with products, such as the 1800 Ultimate Margarita, introduced in 2005 by Proximo Spirits, and Salvador’s Top-Shelf Premium Margarita, from Luxco, both of which are made with 100% blue-agave tequila.

Indeed, a defining characteristic of the prepared-cocktail market is that new products are always being introduced. This market “is characterized by innovation and newness,” said Bacardi’s Chisholm.

Others agree. “The ready-to-drink category is very susceptible to trends,” said Brown-Forman’s Campbell Brown. “A perfect example is the sweet tea explosion over the last few years. On the flip side, the category has its mainstays like the Hurricanes and Margaritas. We’re continuing to see a great deal of innovation around flavors, packaging and new product entries.”

Brown-Forman continues to add products to its Southern Comfort Prepared Cocktail line, with its Hurricane launched in 2009 and its Lime Cocktail rolled out in September. Southern Comfort Lime is a ready-to-go shot brand. “Development in the ready-to-go ‘shot’ arena is injecting new energy into the category,” said Brown.

 In addition, Brown-Forman added a new flavor – Ginger Splash – to its Jack Daniel’s Country Cocktails, a malt-based RTD line, in the spring. The new flavor joins the line’s Downhome Punch, Lynchburg Lemonade, Black Jack Cola and Jack’s Sweet Tea.

This past spring, Brown-Forman also introduced el Jimador New Mix into the U.S. The RTD Margarita in a can is the best-selling RTD product in Mexico and is now available in three versions in the US: the Paloma, the Margarita and the Spicy Mango Margarita.

For its part, Beam Global Spirits & Wine expanded its RTD Cocktail Cube line with new flavors from Sauza Tequila and Cruzan Rum. The company added Strawberry Margarita (Sauza) and Mojito (Cruzan) flavors to the Original Margarita Cocktail Cube. Each Cube, featuring a pour spout, includes about 10 six-ounce cocktails and stays fresh for up to six week after opening. The 19.9 proof Cocktail Cubes are available in 1.75 liter packages (suggested retail price about $18).

Heaven Hill Distilleries introduced its own line, made with Burnett’s Vodka, in July of 2009. The Burnett’s Cocktails include the Cosmopolitan, the Margarita and the Mojito. Heaven Hill reports that the brand has been doing well in its first year. “In-home entertaining and flavor experimentation are incredibly popular trends today, particularly as the economy draws consumers away from the on-premise,” said Reid Hafer, senior brand manager.

Perhaps more than any other beverage alcohol category, the ready-to-serve cocktail market is particularly open to packaging innovations. The Malibu Cocktail products, for example, are packaged in 1.75-liter pouches. “They are press-and-pour, very functional, and are super-portable,” said Senhouse. They also chill faster, keep the product fresh once it is opened and feature leak-proof dispenser nozzles.

In May, Daily’s launched what it is calling “the first squeezable frozen lemon cocktail.” Its Daily’s Frozen Lemonade Pouches can go straight into the freezer, to produce a slushy, blender-like cocktail. The product can also be served unfrozen: either by squeezing the single-serve 10-ounce contents into a glass, or it can even be consumed straight from the pouch. Daily’s offers several of its other RTD products in 10-ounce pouches: Margarita, Strawberry Daiquiri, Peach Daiquiri, Frozen Mojito and Pomegranate Acai Margarita.

The ready-to-serve, prepared cocktail category (as opposed to the malt-based ready-to-drink category) may not, at sales of 6.5 million cases annually, be the largest. “But it’s been around for years. In 2004, according to Adams [Beverage Information Group], it was a 6 to 7 million case per year category,” said Bacardi’s Chisholm. “That’s a decent chunk of volume and it’s not going anywhere. It’s only going to grow.”

And it pays to be ready for it.   


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