Diageo is set to introduce a new sub-category within RTD cocktails in the UK, by launching its Parrot Bay frozen alcoholic drinks in April following ‘explosive’ US growth.
The company will launch the ‘freeze and squeeze’ cocktails – which use a technology that Diageo is seeking to patent, which we covered last December – onto a UK RTD market worth £530m (or $803m, Mintel estimates) after successful 2012 trials with the UK’s second-largest retailer Asda.
The cocktails will also be sold in seven other countries across Europe, although we were unable to confirm with Diageo precisely where as BeverageDaily.com went to press.
Parrot Bay single-serve RTD cocktails (RRP £2.49 per 250ml) come in Berry Daiquiri, Citrus Daiquiri and Pina Colada flavors, and are packaged in a pouch that is frozen before consumption.
Tapping 'explosive' US growth
Louise Robbie, senior innovation manager, Diageo Great Britain, cited “explosive growth of frozen alcoholic cocktails in the United States (+261% volume growth, Symphony IRI for the 52 weeks ending March 20 2011)”.
Thereafter, Diageo had tested the Parrot Bay cocktails in three European countries, Robbie added, and saw great results. “So now is the time to roll the product out further,” she added.
Robbie said the UK launch would “open up huge sales opportunities for the off-trade by offering consumers a new and exciting way to serve drinks during ever popular ‘casual get-together’ occasions”.
In a March 2012 Mintel report, 'White Spirits and RTDs', Jonny Forsyth said the UK RTD market had a "split personality".
"Revenue is still dominated by the major alcopop brand, Bacardi Breezer, WKD and Smirnoff Ice," he wrote.
Sub-sector went toxic...
"However, investment in the once hugely profitable alcopops sub-sector has been virtually non-existent since the sector became toxic due to its association with underage/binge drinking," the analyst said.
New RTDs were now being marketed as a better-quality category, Forsyth added, "a convenient alternative to mixing 'long serves' and cocktails among the younger convenience-led generation".
"This new sector is seeing huge investment - particularly from Diageo - in both innovation and marketing spend," Forsyth said.
"Mintel's consumer research shows these products fulfil a need for portable/convenient mixer options to take to a picnic, barbecue or even a party at someone's house," he added.
As such, Mintel said new market entrants had stabilized RTD value freefall, but still predicts that the sub-category will suffer a 9% UK revenue decline from 2011 to 2016 (2011: £549m; 2012: £530m, 2015 £500m).
Heading off US health concerns
Discussing the wider performance of US RTDs and white spirits in a similar report last November, Mintel said that Diageo had a 36.8% market share as RTD market leader in 2010/11, although Beam Inc. was the only firm to grow sales significantly that year with its Skinnygirl brand.
Food and drink analyst Beth Bloom wrote: "Dollar sales in the category are forecast to grow another 23% through 2017, 13% when adjusted for inflation.
"This is due in part to the resurgence of a cocktail culture, interest in premium products, and product innovation in the category, including flavored spirits and 'light' RTDs," she added.
With millennial consumers driving adult beverage trends, Bloom said Mintel research showed that 21-34 year-olds were more likely than average to consume white spirits and RTDs, and were more likely to do so with high frequency.
One problem spot for RTDs was that Baby Boomers and older consumers may be put off by higher sugar levels and a lack of appealing flavor profiles, Bloom said.
"Promoting products that offer low calories and sugar can help to grow business among all consumer groups," she added.
RTD manufacturers should note consumer interest in mixers, Bloom said, with juice and soda the two most popular to pair with white spirits, "which may translate to stronger sales among RTDs that feature these components".