As a result of the ready-to-drink coffee boom, alcohol companies are attempting to tap into the trend. Jägermeister, Jameson, and Pabst Blue Ribbon are some of the biggest names dipping their toes in the space, but there are several coffee-flavored vodkas, rums, and liqueurs on the market.
“Accurate sales figures are not yet available, but the initial buzz on social media ranges from bemusement to excitement. Even if hard coffee stays a niche drink with a small, loyal clientele, expect to see more varieties join the fray. Given the success of hard seltzer, producers eager to grow their profit margins are looking to the non-alcoholic space for inspiration,” writes John Holl.
Not long ago the Ready-to-Drink (RTD) market was focused almost exclusively on value based offerings and the younger demographic. Recently however, as RTD brands begin to mature, so to have their offerings and their market strategy. New promotions geared around lifestyle led launches, diverse new product development and slick new stylized packaging.
As a result the RTD segment is booming. The category’s largest markets are the U.S. and Japan and growing rapidly as a wider and wider demographic is showing their willingness to try RTD brands and products. The rise and acceptance of the canned format, many low calorie and low ABV offerings as well as a focus on natural ingredients with sophisticated flavors are said to be the primary differentiators that have led to the rapid growth.
The ready-to-drink cocktail category is experiencing growth as it meets consumer demand for convenience. According to Nielsen data, the RTD spirit-based cocktail category grew 40.7% over the last year. Spirit and wine-based RTD cocktails sales reached $62 million and $83 million respectively, while malt-based cocktail sales accounted for $4.7 million. Nielsen stated that the recent RTD growth can be attributed to brands that are experimenting with new and interesting flavors. RTD cocktails give drinkers the ability to enjoy a drink that is typically only found in bars at the location of their choice. Reports show that young adults are opting for RTD cocktails at social gatherings and outdoor activities. Common RTD activities include outdoor picnics (32%), the beach/pool (28%), and traveling/holidays (23%).
Innovation and emerging markets hold the key to the global RTD alcoholic beverage sector. Trends and industry innovation have been accelerating in recent years so producers will need to be mindful in order to stay on top of the market. New trends and new products are expected to drive the market such as hard ciders, premium products, low-calorie, low-alcohol, and low-sugar products.
In the recently published IWSR Magazine just-drinks GLOBAL RTD & Cider Insights 2018 report they note that RTDs are expected to grow by over 30 million liters in the next 5 years, with the largest growth expected in Asia, South/Central America and the Caribbean. That growth is expected to slow however, with the CAGR (compound annual growth rate) from 2012 to 2016 falling from 3.5 percent to 1.6 percent. The three largest markets for RTDs remain Japan, the United States and Australia which combined account for roughly 60 percent of volume and 62 percent of value of the overall sector.
*This article was originally released in August 2023 and updated with additional material in November 2024.
Despite a 1.5% drop in sales from 2022, vodka was once again the top-selling spirit in the U.S. in 2023 with 78.6 million 9-liter cases sold. With the rise of tequila and RTDs reshaping the spirits landscape, however, vodka has been forced to adapt and innovate to maintain its spot at the top of the market.
While beer and wine have experienced challenges with on-premise consumption, vodka has continued to maintain its strong presence within restaurants and bars. This resilience has been assisted by the rise of popular vodka-based cocktails like the Espresso Martini.
As vodka continues to evolve in response to increased competition within spirits, we have compiled a comprehensive overview of the category for those interested in building a vodka brand in the U.S.
How Big Is the Vodka Market in the United States?
Vodka in the U.S. is currently led by mainstay brands such as Tito’s Handmade Vodka, Smirnoff, New Amsterdam, and Svedka. Tito’s managed to lead all vodka brands in growth terms, adding nearly 600,000 cases, but the segment is being pushed forward by smaller high-growth brands like Western Son Vodka and 360 Vodka. The states responsible for the highest sales of 9L cases of vodka are:
California – 8.8 million cases
Florida – 6.7 million cases
New York – 6.2 million cases
Texas – 3.9 million cases
Illinois – 3.3 million cases
The states and territories responsible for selling the most vodka cases per capita included:
New Hampshire – 760k cases (695 per 1,000 adults)
District of Columbia – 333k cases (644 per 1,000 adults)
Nevada – 1.4 million (596 per 1,000 adults)
Wisconsin – 2.3 million cases (527 per 1,000 adults)
The rise of spirits-based RTDs has also led to a renewed interest in flavored spirit offerings, including vodka. While flavored vodka once caught the public eye with extreme options like bacon and bubblegum, the category’s latest iterations are marked by more subtle infusions.
Vodka brands are now offering options heavily inspired by the global craving for botanicals. Brown-Forman’s Finlandia has introduced Cucumber & Mint and Wildberry & Rose options, while brands like Smirnoff are experimenting with more complex flavors like Spicy Tamarind.
While the flavored trend is a global one, the U.S. is currently leading the way. In 2021, the U.S. made up 38% of the global market share for flavored vodka. The next closest competitor was Russia with 17% of global market share.
Flavored offerings also tend to present a more approachable option for younger, legal drinking-age consumers. Among consumers of Absolut Flavored, 21-34 year-old consumers made up nearly 30% of the share, while the same group made up almost 40% of the share for Smirnoff Flavored.
Espresso Martinis Trending
During the pandemic lockdowns, many consumers began experimenting with mixology at home. The interest in creating your own cocktail worked out well for vodka, as many consumers turned to martinis as a go-to option. An intriguing development in this movement is the rise of the Espresso Martini, a cocktail that has revived its popularity and captivated many consumers’ palates.
As the on-premise opened up, the Espresso Martini trend took off, with mentions of the cocktail on Yelp increasing by 300% in the first six months of 2021. In fact, the Espresso Martini was one of the top 10 most ordered cocktails at U.S. bars in 2022, bumping the Manhattan off the list, according to data from CGA by NielsenIQ. Now 25% of people claim they enjoy drinking Espresso Martinis, a 79% increase from 2022.
The Espresso Martini has become a leading example of how vodka’s versatility can lead to creative experimentation. The category’s adaptability, mixability, and capacity to cater to diverse consumer preferences have propelled its growth, making it a prime candidate to continue meeting evolving consumer needs in the dynamic spirits segment.
Rise of Spirit-Based RTDs
In recent years, the RTD category has witnessed a remarkable ascent, partially thanks to increasing consumer preferences for convenient packaging. The trend was initially fueled by the malt-based hard seltzer craze but has since evolved to focus more on spirit-based RTDs. Vodka has emerged as the top-base spirit of choice for this new segment.
This landscape has been significantly shaped by the popularity of High Noon’s vodka-based seltzers. Their resounding success has led to other brands like White Claw introducing their own vodka-based offerings, boosting vodka’s growth within the segment in the process.
White Claw has even decided to extend their reach from pre-mixed drinks to full-strength spirits, with vodka leading the way. Earlier this year, the brand ventured into the realm of spirits for the first time with the introduction of White Claw Premium Vodka. This strategic move underscores vodka’s inherent adaptability, as well as its popularity within the RTD space.
