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Undrinkable, or Unsinkable?

The damning cry against RTDs is largely focused on the part they are perceived to play in underage drinking and binge drinking. The first of these allegations is inevitable. RTDs are colourful, sweet and easy to drink - all factors that will appeal

to young people unused to the taste of alcohol. However, it's important to remember that underage drinking is not a new phenomenon: buying a bottle of vodka and sweetening it with Coke or orange juice was a tendency of the underage drinker long before RTDs hit the scene.

With the introduction of The Portman Group's Code of Practice regulating the naming, packaging and merchandising of alcoholic drinks in 1996, there has been an obligatory maturing of the RTD category and a strict ban placed on any products deemed to be targeting an underage audience. David Poley of The Portman Group says: There has been a noticeable decrease in complaints on RTDs over the past few years. In 1996 and 1997 there were lots of problems, and many products were disappearing without trace, but out of six complaints so far this year, only one of them has been related to an RTD.'

Binge drinking is also something of an anomaly with regards to RTDs. Karen Salters, marketing director of Beverage Brands (WKD), points out: The fact is that RTDs account for less than 3% of the total liquor market, and yet we are somehow held accountable for a hell of a lot more than that. It's amazing - and quite unfair - how often you read an article with the words "binge drinking" in the headline and RTDs in the main body.' Richard Clark, marketing controller at Halewood International (Red Square) is equally unimpressed with the hammering the category has received in this regard. It's worth noting' he says, that RTDs are, on average, between 4 and 5% ABV, and it's easy to forget the size and alcoholic content of the wine and beer that is drunk.'

All of the major brands - including Smirnoff Ice, WKD, Bacardi Breezer, Archers Aqua/Vea, Vodka Kick (VK) and Red Square - are members of The Portman Group, and Diageo has recently announced a global consumer information policy, which will see responsible-drinking reminders added to all Diageo-owned brands. Poley adds: From a social responsibility viewpoint, we wouldn't single out RTDs for any special criticism.'

The figures are down

There isn't, of course, any argument against the facts and figures affecting the RTD sector. The overall market has declined by 15% in the past year, bringing the total decline up to 23.4% since 2003. Fortified wine is the only other category in decline, while all other liquor sectors are in growth: light wine and sparkling wine have seen the biggest growth rate in the past two years, with a market increase of 14% and 14.5% respectively. These damaging statistics for RTDs have not gone unnoticed, and the category has had to face the inevitable backlash of decreasing fridge space in the on-trade and shelf space in the off-trade.

David Rollason, category buyer for Enterprise Inns, says: RTD sales volumes are down in line with the market. A lot of pubs are growing more conscious of the need for responsible drinking, and happy hours now seem to be a thing of the past.' This is obviously not good news for a sector that has been partly driven by happy-hour promotions and three-for-two offers. Rollason continues: There's a generation of people who missed out on ciders and wine and went straight on to RTDs, but now the growth of wine, premium packaged lagers (PPLs) and packaged ciders is nibbling away at the RTD market.' And this, he adds, is currently having a more detrimental effect on the sector than the tax increase of a couple of years ago.

A spokesman for WaverleyTBS is similarly downbeat, saying: Too much fridge space has been given to RTDs over the years, and too many flavours have been available.' He agrees with Rollason that beer and packaged ciders, such as Magners, are taking over, although he still places a certain amount of blame on the tax increase, pointing out that it had a significant impact on cost price and this was the start of the decline'. However, they both state that a number of key brands, such as Smirnoff Ice and VK, are still relatively strong, with the WKD brand currently bucking the trend and showing a growth.

The supermarkets are also fairly negative. Ben Wheeley, category buyer for Sainsbury's, has reported a 20% reduction in shelf space and a 40% reduction in the number of lines, through the de-listing of poor-performing brands and duplications. Harvey Lees, spirits buying manager for Asda, has also confirmed a decrease in shelf space and a rationalisation of the range, although he points out that, while sales have been in decline, the last four weeks' data shows that RTDs have stablised'. In line with the on-trade, both of these supermarkets have attributed the overall downward trend to an increase in the market share for other drinks, such as wine, lager, cider and vodka. But it's not all bad news. A spokesperson for Waitrose says: RTDs are up year on year, due to products such as Pimm's & Lemonade and Gordon's

& Tonic.' These are both relatively new launches, and perhaps their success here shows the power of continuous innovation in ensuring a positive future for RTDs.

And there hasn't been any shortages of innovations in the past couple of years. Some of these haven't worked - the wine-based RTD, for example - but there's still potential for others to create an impact. One of the relatively new additions to the UK market (since 2003) is the Vodka Mudshake from the privately owned New Zealand company Independent Distillers. Its unique selling point is the fact that, through a specialised production process', it is able to contain fresh, full-cream milk and still maintain a two-year unrefrigerated shelf life. It hasn't created waves in the industry quite yet, but Andy Small of Independent Distillers says: Vodka Mudshake is different from the usual RTD, and it's doing well. This is shown by the increasing distribution figures across the UK.'

Small believes the off-trade is equally important as the on-trade, and a new 630ml bottle has been introduced to cater for the growing take-home sector of the market. Another innovative product from Independent Distillers is Woodstock - a blend of bourbon and cola. There is currently little mention of this from the UK retailers, but according to Small, Woodstock accounts for 70% of the RTD market in Australia and New Zealand. This is where Hooch and Two Dogs came from, so who's to say that a similar boom for a bourbon-and-cola ready mix isn't in the pipeline?

Diageo certainly seems to think there's potential here, following its launch of Slate 20 - a blended-bourbon mixed drink - in August this year. Diageo GB's innovation manager Lavinia Leung commented at the time: We believe there is a real opportunity to boost the RTD category. The masculine product range will give it credibility with existing male RTD consumers and new converts. From our experience with the Australian market, dark-spirit RTDs are seen as more masculine.' From this autumn, there will be a 2-million marketing campaign put behind Slate 20, including national print, outdoor advertising and below-the-line activity.

Steve Perez, managing director of Global Brands (VK), agrees that targeting male consumers is the way forward: VK has a cross-gender appeal. We do not target female drinkers directly but rather 18-24-year-old males. By marketing products to females, you automatically alienate males, whereas females are not put off by a product that is aimed at men.' Richard Clark of Halewood (Red Square) is positive about Slate 20, but he doesn't think the gender aspect is so important: Slate is a genuine innovation that offers consumers something exciting and new. Any drink that can do this - and is strongly and correctly supported - has a good chance of being successful, whether its primary target audience is men or women.'

Different for girls?

With all this talk about the importance of men, do not think that women have been forgotten - far from it. In May of this year, Bacardi introduced a Bacardi Breezer half-sugar range, specifically designed for females. Fraser McGuire, senior trade marketing manager for Bacardi Breezer, states: The RTD consumer has changed since the early days, and our target of women aged 25+ is looking for products that are not as sweet, and this is evident in the initial success of the Bacardi Breezer Half Sugar range.' The launch has been supported with a 2.5-million ATL advertising campaign involving key women's press, outdoor sites and sampling in targeted outlets such as Oasis and Dorothy Perkins. Diageo has also recognised the need to cater for the not-so-sweet tooth with this summer's launch of Archers Vea, a low-sugar range of fruity RTDs with flavours such as Wildberry, Tropical and Apple.

Beverage Brands is another major company keeping up the pace in the sphere of new product development (NPD) with the launch last month of WKD Red. The WKD brand has fared well this year, reporting an increased take-home volume share of 16.4% in September; this has pushed the brand into the number-two spot in the RTD take-home rankings, overtaking Bacardi Breezer and putting the pressure on market leader Smiroff Ice. Beverage Brands is looking to take advantage of this success with the new WKD Red, and MD Karen Salters explains: In consumer research, 65% of the drinkers questioned said that they try to look for something new when buying RTDs. WKD Red provides consumers with a product

that looks and tastes different and has the added benefit of the WKD brand name.'

Salters is keen to stress that WKD products will continue to receive full marketing support, saying: We are helping to keep WKD front of mind, with a massive 4 million worth of media coverage - including TV, cinema, press, radio and poster advertising - in the run-up to Christmas this year.' Diageo is also getting into the Christmas spirit, announcing the imminent onslaught of the largest Smirnoff Ice campaign since 1999'. Jon McCarthy, brand manager for Smirnoff Ice, confirms this. Our Christmas campaign sees a further 4-million investment - four times the amount spent last year - to follow up the 4-million summer programme for the brand, to launch the Uri campaign.'

The RTD category may be in decline at the moment, but it's still worth a 1.1-billion turnover (800 million in the on-trade; 300 million in the off-trade). The nature of the RTD - a chemically processed, pre-mixed cocktail - makes it very easy to criticise. In a world that is becoming increasingly obsessed with the provenance of food and drink, as well as looking for ever-higher levels of quality, the RTD is a somewhat-awkward onlooker. What must be remembered, however, is that RTDs are party drinks and they've never tried to be anything else. They don't have any pretensions or snobbery - they are purely about having fun, and within the context of responsible drinking, what is wrong with that? The word on the street saying RTDs are all but finished is simply not correct: the influx of new products and huge advertising campaigns are enough to bear that out. Categories within the drinks industry are subject to peaks and troughs in the same way as everything else, and although RTDs have been in the shadows for a little while, there's currently no real reason why they can't come back into fashion.

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