Drinks giants shake-up premixed cocktail market with premium drive

For years the ready-to-drink (RTD) category has been blighted by associations to the nation’s binge-drinking troubles. However, product innovations from drinks makers such as Diageo, Pernod Ricard and Funkin are now looking to establish the category, in particular premixed cocktails, as a more premium, healthier alternative to beer and wine for the growing number of at-home drinkers.

Drinks makers are premiumising the premix cocktail category to drive sales.

While the recession can hardly be seen as a fillip for any sector, the shift in consumption from pubs and clubs to the rise of at-home drinking over the last two years has helped breathe new life into ready-to-drink spirits’ lacklustre sales. At the tip of this upswing are premixed cocktails, which could grow tenfold over the next five years to be worth £500m in the UK according to Mintel, if the current level of demand continues.

Industry experts observe that the growth of the sub-category will be fuelled by alcohol marketers’ ability to encourage shoppers to trade-up from value brands by closely mimicking the freshness of bar-serve drinks. Phil Tate, chief executive at alcohol consultants CGA Strategy, says there is added pressure on companies to build brand loyalty in the off-trade in order to introduce new consumers to the associated spirit brands.

He adds: “Going to a friends house has become the big occasion of the week for many young drinkers now. That’s becoming the staging venue before they go out – it’s a party occasion now and that’s where these pre-mix drinks work so well where spirits and beers might be seen as too strong.“

Diageo plans to reposition its premixed drinks portfolio as the “number one choice for the casual get together occasion”. The company is rolling out a £2m nationwide TV campaign to highlight the quality of the premixed varieties on offer from brands such as Gordon’s and Pimm’s. It is also tapping into the demand for “skinny spirits” – drinks with less calories – with a £2m marketing push for its new Parrot Bay range of frozen alcoholic cocktails in the hope of establishing a new sub-category within RTD cocktails.

Meanwhile, Pernod Ricard is launching Malibu branded cocktail bars in London, Liverpool, Birmingham and Manchester this summer to encourage people to sample its pre-mixed cans and purchase in-store. The company is also promoting its Jacob’s Creek range of wine cocktails around this month’s Wimbledon tennis tournament in order to broaden the appeal of the brand.

Smaller producers are also looking to exploit the renewed confidence in the cocktail sub-segment. Cocktail mixers brand Funkin is promoting its first consumer campaign, created in partnership with the Red Brick Road, to capitalise on a successful 2012 which saw 30 per cent growth. The business is also set to announce several in-store tie-ups with different drinks makers in the coming months to communicate Funkin’s 100% natural credentials.

Andrew King, Funkin chief executive, says natural ingredients and an increasingly premium profile for the category will help retain younger drinkers who would otherwise move on to stronger spirits.

He adds: “Consumers are looking for authentic, quality drinks that have lower calories but also taste great. The category has struggled in the past because drinks weren’t authentic, that’s changing and the drinks are getting better visibility in the off-trade as a result.”

The general trend towards premiumising the cocktail category is gaining momentum and as a new generation of brands enter the market, the much-maligned RTD category is starting to come of age.