Entering the spirit world

The popularity of spirits offers the best indication for future innovation in RTDs. But buyers are warning that copycat flavours will not succeed

Innovation is the watch word when it comes to RTDs. The hunt for the next craze is still on, and suppliers are keeping a close eye on where drinkers, tired of RTDs, are going.

Spirits have shown the biggest potential, growing by 2% in the last year in contrast to RTDs' 11% slump, according to AC Nielsen figures.

Buyers attribute this to consumers' desire for a more adult-style drink.

Caroline Menzies, commercial director of Ha! Ha! Bar & Canteen at Yates, says: "The problem with RTDs is that they are still perceived as being for a younger audience. We are seeing a massive resurgence in spirits and cocktails."

Jason Danciger, purchasing director at SFI, which includes the Slug & Lettuce and Bar Med brands, agrees: "We've just finished our category review and the spirits that are doing well are vodka, tequila and rum."

While some argue that the market is saturated with vodka-based RTDs, the move towards premiumisation in spirits offers new opportunities for vodka brands.

To capture what it perceives as a gap in the market for a "premium RTD", Interbrew is introducing Absolut Cut, into top-end style bars.

The company describes the drink as a "super-premium mix of Swedish tonic with a citrus taste, combining lime, orange and mandarin". It hopes to roll it out nationally next year.

Purchasing manager at Mitchells & Butlers, Julia Rowlinson comments: "Absolut is promising incremental sales and intends to grow the marketplace through the premium product. It will probably hit the high street next year."

Meanwhile, Spencers Drinks has picked up on the trend for white spirits with its tequila-based RTD, which is currently being tested within the SFI estate.

Tequila Mex incorporates passion fruit and orange, intended to give the Tequila a softer flavour. A lemon and lime variant will follow next year, depending on the success of the trial.

Danciger says: "Tequila Mex is the first tequila-based RTD

on the market and I think it will do well because the bottle is premium packaged and its base product is in growth."

Rum-based RTDs promise another potential area for growth, according to Danciger. He says: "There are presently no rum-based RTDs out there, yet rum is growing at a phenomenal rate ­ why don't suppliers look at this?"

He also predicts that suppliers could find successful innovation by reviving forgotten brands.

"Retro mixes could be the next big thing for RTDs" he says, adding: "Suppliers shouldn't discount the possibility of a Hooch revival ­ everybody laughed when Blue Nun brought back their wine, but it worked."

However, wine-based RTDs haven't enjoyed the same success.

As one particular buyer at a leading pubcompany says: "We have had one or two wine-based RTDs presented to us and they haven't been received very well, so we haven't done anything with them."

Some buyers believe wine-based RTDs confuse consumers because they are trying to appeal to both wine and RTD drinkers ­ typically two different age groups. Menzies says: "Wine is an older market but the younger packaging of Bliss, and its TV advertising linking it with Footballers' Wives, confuses consumers about what it is trying to be."

Suppliers are also looking to the diet category for inspiration. Bacardi Breezer hopes to pioneer this sector through its diet range. Nick Hunt, senior trade marketing manager, says: "The diet Lemon variant has recently been re-listed in 650 Wetherspoon outlets and the Diet Orange flavour will launch in the on-trade if it proves successful in supermarkets."

But some retailers question whether the target 18 to 24-year-old market is concerned with the issue of weight. M&B's Rowlinson says: "Bacardi Breezer is hoping that the diet variants will rekindle the brand but I don't think RTD drinkers are worried about dieting."

There is one clear message, however,from suppliers concerning what they do not want. And that is the launch of copycat flavours.

Another buyer from a high street chain says: "Mudshake has already been copycatted but there's not enough room in the market for more than one product of the same flavour."

Suppliers are responding to buyers' frustrations at being offered too many flavours of every brand by consolidating their portfolios.

Steve Perez, managing director at Global Brands, whose portfolio includes VK Vodka, says: "At the moment we have nine flavours in our range but I'm not afraid to cut those that aren't performing. I would be happy to scale the range down to six."