Is the RTD spirits category in decline?

RTD (ready to drink) spirits have enjoyed strong market growth since their inception in the 1980s. However, recent changes in consumer behaviours have placed this category under threat, with many of the target demographic, young adults, turning away from alcohol altogether​. So, is the RTD spirits category in decline?

Is the RTD spirits category in decline?​

The short answer is no, or rather, not yet. Because while the category is still growing, attitudes to alcohol consumption are changing, making its future less certain. In fact, alcohol consumption has been falling steadily since the mid-2000s, with figures from the World Health Organization (WHO) showing that between 2010 and 2020 alcohol consumption in Europe declined by 0.5 litres per capita.

“There is an overall decline in the alcohol category, including wines, whisky, rum, vodka and others,” Ananda Roy, consumer goods industry advisor for market research firm Circana, told FoodNavigator. “This has largely been because of lower demand, significantly lower consumption by volume per occasion, and the availability of healthier options such as flavoured water drinks.”

So why are some areas of the alcoholic beverage sector declining while the RTD spirits category continues to see growth?

What's changing in the alcoholic beverage sector?​

Closer analysis of the decline in alcohol consumption highlights clear social and generational differences and helps to explain why sales of RTD spirits remain buoyant.

“RTD spirits and pre-mixed cocktails (in cans and glass bottles) are a growth segment in certain consumer demographics such as women, younger cohorts under 44 years, and urban professionals,” explains Circana’s Roy. “This is an attractive consumer target because they're employed, tend to be urban, able to spend and often buy premium products (just less frequently).”

Having said that, the youngest generation of legal alcohol consumers, Gen Z, appears much less interested in alcoholic drinks altogether, particularly when compared to previous generations.

“Younger generations have new relationships with alcohol, Gen Z in particular are finding new ways to socialise which doesn't just involve a pub or bar,” Freya Twigden, founder of kombucha brand Fix8 Kombucha and Fibe Prebiotic Soda, told FoodNavigator.

“There is definitely a generational change in alcohol consumption, with a growing proportion of young consumers not drinking altogether, preferring sparkling water drinks or regular water or low-sugar, high caffeine energy drinks,” agrees Circana’s Roy.

And interestingly, it’s not just consumers who are changing their behaviours, with regards to RTD spirits, industry is making changes too.

“Alcopops - classically the cheap, overly sweet, high alcohol RTD spirit drinks - are not in decline but have become less of a focus for the industry,” says Circana’s Roy.

And health has played a major role in the decline of overall alcohol consumption.

“We’re drinking less overall and then choosing better-quality alcohol when we do,” says Fix8 Kombucha’s Twigden. “The pandemic made us more aware of health. We have greater knowledge on how to 'hack our health’ and alcohol is often targeted as not being good for us.”

"We’re drinking less overall and then choosing better-quality alcohol when we do."

There has been a major shift in consumer behaviours, in recent years, as the health and wellness trend has gained traction. This has also given rise to the reduced-alcohol category, with consumers deciding that less is more when choosing to drink alcohol.

“Low-alcohol RTD spirits is a growth category,” says Circana’s Roy. “Consumers, particularly young consumers, are choosing low-alcohol and zero alcohol pre-mixed spirits and seltzers.”

This has been fuelled, in part, by new drinking trends.

“The Dry January trend has been steadily extending to dry February, dry March etc.,” he adds. “There is a clear trend to moderation - including what is being called ‘zebra-striping​’ - where an alcoholic drink is followed by a glass of water alternately to reduce the chance of getting drunk, especially among women."

However, in spite of this, the RTD category, within alcoholic beverages is in fact still growing, with sales across Europe holding strong.

How are RTD spirits bucking the declining alcohol trend?​

Despite the decline in alcohol consumption overall, RTD spirits remain popular with consumers, generating a global market value of 4,510.91 million USD in 2023 and a projected growth rate of 6.5%, according to Zion Market Research.

"There is no evidence to suggest a lack of demand for RTD spirits."

“There is no evidence to suggest a lack of demand for RTD spirits,” says Circana’s Roy.

So why is this? Well, it could be the variety it offers.

“There is a huge amount of choice including margaritas, G&Ts, negronis all in a can. We have more choice, and our pallets have become more sophisticated,” says Fix8 Kombucha’s Twigden.

It could also be a result of convenience, as consumers can buy drinks to go, adding them to picnics or to enjoy while travelling, as well as drinking them in pubs and bars.

“The rise of cocktails and other drinks in a RTD format makes variety convenient,” adds Twigden.