The Enticing Future of Ready-to-Drink Beverages

Over the past two decades, there’s been an exciting shift towards beverages that are easier and more enjoyable to drink. These drinks, known as alternative alcoholic beverages (AABs), include flavored malt and sugar-based products, spirit ready-to-drink (RTDs), wine RTDs, hard cider, and wine in cans. Sold in single-serve packages, they offer the perfect combination of convenience and flavor.

The AAB market has seen impressive growth, expanding by 7.5% each year since 2002, totaling a 426% increase. In contrast, the traditional beer market has declined by over 5% during the same period. This trend highlights a major consumer shift toward more modern, flavorful beverages. Spirit RTDs, in particular, have become very popular, reflecting this change in taste preferences.

In 2020, cannabis beverages were added to the AAB category. S&D Insights estimated that cannabis beverages accounted for about 18 million cases in 2023. Despite growing interest, the market faces challenges due to uncertain regulations, making some distributors hesitant to stock these products. Reports suggest that 25% to 35% of cannabis users drink less alcohol, indicating a notable shift in consumption habits.

Recent innovations in the AAB sector have been driven by major beverage companies like Coca-Cola, Pepsi, and Monster Beverages. Their entry into the market has accelerated the growth of AABs, moving beyond traditional alcohol formats. The focus has shifted from various beer styles and wine varieties to unique flavor combinations with traditional alcoholic bases, creating new and appealing taste profiles.

AABs now make up 12.6% of total beverage alcohol servings, surpassing wine. This share is projected to increase to 18.4% by 2027, underscoring the growing consumer preference for these modern beverages. The growth of AABs is evident across all market segments, not just beer. In 2024, spirits and wine AABs are growing at rates exceeding 20%, while malt and sugar-based AABs are seeing solid single-digit growth. This ongoing momentum shows that the popularity of these beverages is far from slowing down.

Projections suggest that AABs will capture an additional 5% share of the adult beverage market by 2027, driven by continuous shifts in consumer consumption patterns. AABs tend to grow rapidly within single segments before moving to new ones, with each new sub-segment, like hard seltzers or hard teas, often surpassing the previous one in popularity.

This rapid evolution presents both challenges and opportunities for marketers. Brands need to innovate continuously to stay competitive in this fast-paced market. The example of hard seltzers, which captured significant market share in 2016 but soon made way for newer segments, illustrates the dynamic nature of this industry. Marketers must stay agile and ready to adapt to changing consumer demands.

The rise of AABs reflects a broader trend toward convenient, flavorful alcoholic beverages. With the integration of cannabis beverages and ongoing innovation from major companies, the AAB sector is set for continued growth. As the market evolves, staying informed and adaptable will be key for brands looking to succeed. This exciting landscape offers plenty of opportunities for growth and success.