Innovation Evolution: Ready-to-Drink Cocktail Formats Go Large to Win

The momentum of spirit-based ready-to-drink cocktails continues to surge. Nielsen IQ reports US sales of RTD cocktails reached $1.85 billion in the 52 weeks ending August 2023, an increase of +37% vs. last year. Gains reflect increased consumption, with units up +32% for the year.

And forecasts for the total North American RTD alcoholic beverage market show no signs of slowing. With flavored malt-based options in the mix, research firm ReportLinker estimates the $9.7 billion segment may surpass $16 billion by 2028, with spirit-based cocktails driving growth.

The appeal of a single-serve, ready-to-drink cocktail isn’t dimming. Some brands are now looking at larger formats for RTDs to meet the evolving needs of alcoholic beverage drinkers. Read on to learn how to go large and win with your RTD brand.

Level Setting: What are the Ready-to-Drink Cocktail Formats

Let’s start our investigation into the evolution of RTDs by distinguishing between formats.

Small Format RTDs are Single Serves

Smaller formats currently dominate the ready-to-drink cocktail market.

• Packaging is usually cans or glass bottles sized between 355ml and 473ml.
• Consumption occurs straight from the bottle or can as an individual serving.
• Alcohol content (ABV) often offers drinkers a middle ground between beer and spirits.
• For spirit-based RTDs, formulations are familiar flavors, sometimes inspired by classic cocktails but with a twist to add excitement to the experience.

Large Format RTDs are a Multi-Serve Choice

Larger format ready-to-drink cocktails differ from traditional RTDs because of their ‘ready-to-serve’ (RTS) characteristics.

• Sizes range from 750ml up to 1750ml.
• Packages are resealable bottles, either plastic or glass or ‘bag-in-box.’
• Brands design the large format RTD to pour over ice or blend with ice before consumption at parties or for multiple servings.
• Formulas often recreate the cocktail experience (including the expected ABV) with no bartending background required.

Currently, the large formats account for 22% of US dollars and 18% of units. Larger sizes contributed more than $400 million to RTD sales in the last year. While not yet pulling in their ‘fair share’ of growth at retail, the ready-to-serve sizes are starting to buzz.

What’s Driving Large Format Ready-to-Drink Cocktail Innovation?

Brands are getting behind RTD cocktails in larger formats, responding to the growing interest among North American alcoholic beverage drinkers.

Brands are Launching More RTD Large Formats

Product introduction insights from Mintel’s Global New Products Database (GNPD) show North American brands are investing more innovation effort into larger format ready-to-drink cocktails. Launches for the 52 weeks ending June 2023 show large formats represented almost 20% of RTD innovations, on par with the height of pandemic lockdowns and about double pre-COVID activity.

Large Format RTDs Fit Unique Needs

The value proposition of larger format RTDs addresses several needs.

• Larger-size RTDs offer people a convenient way to serve cocktails to a group. In a recent industry article, Derek Mercer, who started the Chicago-based Present Tense bar, offered his perspective on the appeal of large formats. Choosing large format cocktails is “just like ordering a pizza. It makes hosting a party a lot easier—there’s no mess so you can enjoy your party. You buy a gallon of milk,” he reasons, “why not buy a gallon of cocktails?”
• And large format ready-to-drink cocktails elevate the BYOB experience. Apologue’s Robbie Haynes, who created Sunday’s Finest Gold Fashioned, comments, “I think there’s a wow factor with the large format. You are making a statement by showing up with this bottle.”
• Shifting RTDs into a multi-serve package also helps hosts deliver a quality cocktail. Charles Joly of Crafthouse Cocktails notes that “after spending so much time at home …, many [people] have nested a bit more and upgraded their home bar and entertaining situation. There’s a nice balance to be struck when hosting a crowd; make a signature cocktail or two, but then let a quality prepared product do some of the heavy lifting so you’re free to enjoy time with your guests.”

RTD brands are responding to desires for a quality drinking experience by developing premium beverages.  Premium is the dominant price tier, but for both small and large formats, the super-premium options are fastest growing in the last year on a dollar and unit basis.

Ready-to-Serve Cocktails Simplify the Drinking Experience

When a favorite cocktail is a complex concoction, having a pre-made option generates interest among drinkers. A recent survey from Mintel reveals the more complicated cocktails that could attract buyers who may not enjoy the bartender role.

• A pre-made Long Island Iced Tea appeals to 4 in 10 drinkers, perhaps because they don’t have the four required spirits to make the LIT cocktail at home.
• Mojito ranks #2 in preference because muddling fresh mint and sugar, even if you own a muddler, isn’t for the faint of heart.
• More than one-fourth of drinkers may like the idea of a pre-made Blood Mary to avoid the potential mess of shaking up a good cocktail.
• Manhattans and Old-Fashioned RTD cocktails connect with about 2 in 10 Americans because zesting citrus, finding bitters, and remembering to buy cherries takes some commitment.
• RTD or RTS Espresso Martinis also attract drinkers who may not have coffee vodka or the strainer and shaker to deliver the expected blend.

Flavors to Explore in Large Format Ready-to-Drink Cocktails

With spirits providing versatile bases in RTD formats, flavor innovation is limited only by your imagination. But having a flavor that sells is an essential part of the development process! NielsenIQ data shows Margaritas dominate the current large format RTD cocktail market. Brands are also exploring Manhattans, Cosmopolitans, and Old Fashioned varieties, generating sales gains that far outpace the total large-format segment. Smaller share but fast-growing types of cocktails include:

• Martini
• Bloody Mary
• Paloma
• Mule

Application Insights from FlavorSum’s Blake Lyon

One cautionary note about delivering premium Bloody Mary cocktails in RTD formats comes from Blake Lyon, FlavorSum’s Alcoholic Beverage Application Scientist. He recommends finding a bottler willing and able to make Bloody Mary drinks that meet expectations.  Lyon comments, “real ingredients are essential to the drinking experience.  And tomatoes have a higher contamination risk from bacteria like salmonella or E. coli.  Tomato ingredients require refrigeration and are more challenging to process without adequate production structure.”

“When you begin your exploration,” Lyon continues, “think about the type of image you want to communicate with your beverage.  Do you want the standards or classics with a twist through flavor as a way to stand out?  And who do you want to connect with through your drink?  You can design a beverage that offers an upscale experience for in-home entertaining or one that fits the outdoor BBQ or pool party.”

Traditional flavor profiles in familiar cocktails are a relevant starting point if you’re bringing your RTD brand into the large format segment. But flavor innovation can give you a point of difference and a story to tell. For example, if you choose to create a larger format margarita but want to distinguish your brand, you may want to align with flavors gaining traction, such as:

Which Comes First in RTD Cocktail Development – Base or Flavor?

You could start your large format RTD development by considering flavor and then exploring whether it fits a specific base. Even a well-known profile, like lime, which holds 30% of the large format dollar sales, can still connect with RTD buyers. For example, lime daiquiris in large formats gained momentum in the past year.

“I always recommend starting with decisions about the spirit,” Blake advises, “because notes within the base will suggest complimentary or contrasting flavor profiles. For example, you might not think a grapefruit flavor in a whiskey cocktail would fit, but the experience is surprisingly good! You can travel beyond those guardrails, but they offer a good starting point.”

Discovering pockets of growth or areas that fit your brand story takes some sleuthing, but investing the time can improve your likelihood of in-market success. Check with your flavor house to see if they have insights to support your innovation plan.

Need Support Developing Your Large Format Ready to Drink Cocktail? Connect with FlavorSum

Selecting a cocktail concept and flavor profile for your large-format RTD are key steps in the development process. Delivering a great taste experience takes expertise in alcoholic beverage flavor development and applications science. Let’s connect and talk about how FlavorSum can bring your RTD idea to life. Great taste awaits! Reach out to our team to get started!