Published September 2024 | Average reading time: 2-3 minutes
The RTD (Ready-to-Drink) category is projected to grow by 12% in volume from 2022 to 2027, reaching a market value of $40 billion across ten key markets. This growth is anticipated to be partly driven by the rising popularity of Rum-based RTDs, particularly within the cocktails and long drinks sub-category. Rum’s versatility as a base for tropical and exotic flavours has made it an increasingly attractive option for premium RTD offerings, which are expected to play a significant role in this expansion.
The rise of Rum as a base for RTDs
Tequila and vodka are currently the most popular bases for spirit-based RTDs in the U.S., dominating the market with their mixability and wide appeal. However, the RTD landscape is now experiencing significant growth in Rum-based options. This trend reflects Rum's increasing popularity within the broader spirits category, which is also influencing the RTD segment. With Rum now accounting for 13% of the overall spirits market, these new offerings tap into both the rising interest in Rum and emerging flavour trends like coffee-infused drinks.
Why Rum? The appeal of tropical flavours
Why are we seeing strong growth in Rum in the RTD space? Part of it has to do with the growing popularity of cocktail culture, which has driven consumer interest in more sophisticated and diverse drink options. As more people seek out quality cocktails, Rum—known for its versatility and rich flavour profile—has naturally found a place in the RTD market. Rum-based RTDs allow consumers to enjoy classic cocktails like Mojitos, Daiquiris, and Piña Coladas conveniently, replicating the experience of a well-crafted drink at home or on the go.
Next to the cocktail culture, there is also a strong consumer desire for new and exciting flavours. Rum, with its ability to blend well with tropical fruits and spices, meets this demand perfectly. As consumers look further from traditional spirit bases like vodka and gin, they increasingly turn to Rum for its unique taste and the variety of flavour combinations it offers in RTD formats.
Rum has also benefitted from the market’s shift towards higher premiumisation. Rum brands focusing on providing exquisite experiences are gaining popularity, which has spilt over into the RTD market. Trends show that consumers are willing to pay more for RTDs that feature premium Rum, appreciating the complex flavours and craftsmanship that these higher-end options offer.
About the RTD market
The Ready-to-Drink (RTD) market is rapidly expanding, fueled by consumers' growing desire for convenience paired with high-quality, pre-mixed beverages. Understanding the dynamics of the RTD market allows us to explore how Rum can innovate and grow within this sector.
Consumer demand and market growth
The consumer perception of RTDs is shifting. Once regarded as a convenient option compared to hand-crafted cocktails, RTDs are becoming more prevalent choices among drinkers. Thanks to innovations in branding and packaging, this space has gradually been perceived as the meeting point between convenience and sophistication, further boosting sales for the RTD category.
Regarding sales, data from IWSR showed that the number of consumers who enjoy RTD beverages more than once a week increased from 39% in 2022 to 43% in 2023. For Rum, this increase represents possible growth avenues as consumers gradually seek out new and unique flavours.
Innovation in RTDs
Part of the growth in the RTD market stems from innovations surrounding packaging and flavours. According to IWSR, just 1% of new RTD products used plastic-only packaging in the second half of 2021, a 5% decrease compared to the first half of the year. In plastic’s place, glass packaging has taken over as it is largely equated with the premium experience.
As consumers become increasingly health-conscious, producers opt to highlight more “natural” ingredients in their products and marketing. These ingredients may be more favourable to drinkers due to their appeal as being the healthier option, and they contribute to the premiumisation of the RTD category.
Opportunities and challenges for Rum in the RTD space
As the perception of RTD heads towards more premium, Rum may be fitting in this category due to its own premiumisation. The appearance of single-cask Rum and unique, holistic Rum blends add to Rum’s top-quality status, which falls into the development of the RTD market. Consumers’ need for new and more exotic flavours also represents an opportunity for Rum to surpass prevalent options such as gin and tonic in the RTD market.
Alongside opportunities, Rum also faces certain challenges in the RTD space. Fewer people are drinking alcohol, and some are opting for low-alcohol products. This makes competition in the spirits market bigger, as producers vie for the same consumer base. The future looks promising, with exciting opportunities on the horizon.
The future of Rum in RTDs
The high-quality appeal and varying consumer preferences represent many opportunities for Rum to thrive in the RTD market. As RTD beverages continue to evolve from simple, convenient choices to high-quality, crafted experiences, Rum stands out for its ability to offer rich, tropical flavours that resonate with both traditional cocktail lovers and adventurous drinkers seeking new experiences.
As health consciousness and low-alcohol alternatives gain popularity, the Rum-based RTD market is well-positioned to thrive. By focusing on innovation through premium ingredients, sustainable packaging, and distinctive flavour profiles, Rum can establish a strong presence in the growing RTD sector, offering consumers an appealing combination of convenience and quality.
Frequently asked questions
What does RTD mean in drinks?
RTD stands for Ready To Drink. It is a category of pre-mixed beverages that can be easily consumed on the go. RTD cocktails are a subcategory of RTDs.
What is the difference between seltzers and RTD?
(Hard) seltzers are a subcategory of RTD. Seltzers are fizzy drinks with alcohol designed to provide users with a refreshing experience. Consumers of seltzers want a light alcohol experience that a beer or a cocktail might be too overwhelming for.
How do I buy Rum for my RTD brand?
Are you considering acquiring Rum in bulk for your new RTD product/brand? We’re happy to help! We invite you to visit our Blending Tool, where we help you figure out your desired Rum flavour profile to make your product stand out.
