The pandemic triggered healthier consumer lifestyle choices. But it also sparked an alcohol consumption spike that continued in 2022. To bridge these two trends, manufacturers are investing in healthier and premium alcohol drinks. New rollouts in 2022 included Osena Spiked Coconut Water, Build by Pulp Culture+ and Freshie Organic Tequila Seltzer, all claiming to provide consumers the best of both worlds.
Functional innovations are emerging within the broad category to great success, manufacturers say. “We know people, especially fitness enthusiasts, want the positive outcomes of a better beverage that naturally contains alcohol,” said Brendan Brazier, co-founder of Los Angeles-based hard juice manufacturer Pulp Culture, which recently launched Build by Pulp Culture+. The protein-boosted, zero-sugar probiotic drink is formulated with botanical adaptogens and contains 4.9% alcohol by volume.
“People are paying more attention to what they’re drinking and eating,” said Paige Iseminger, who, along with cofounder Ryne Iseminger, launched Freshie Organic Tequila Seltzer. Both entrepreneurs come from outside the traditional alcohol-beverage space, bringing a fresh perspective to spark the evolution occurring in packaged alcohol beverage innovation.
With Freshie, Northbrook, Illinois, consumers “can feel good about getting the purest, most organic drink possible. [The product] endured rigorous analyses to ensure the organic nature of the key ingredients in its entire line of tequila seltzers,” Paige Iseminger said.
Drink Direction
Consumers are also gravitating toward drinks formulated with free-from and premium ingredients.
This niche of the ready-to-drink (RTD) canned cocktail segment is thus garnering position within convenience cold and warm sets, and c-stores are in excellent position to capitalize.
“The inherent advantage for c-store retailers is that their core consumers tend to be less price-sensitive, which somewhat limits the risk of adding higher priced items to the assortment, regardless of whether premiumization is real or simply perceived,” said Michael Wyatt, beverage specialist for Chicago-based data firm IRI.
“We know people, especially fitness enthusiasts, want the positive outcomes of a better beverage that naturally contains alcohol.”
Additionally, the out-of-stock dilemma for various store categories, including packaged alcohol, is still plaguing c-store merchandising strategies. This has allowed newer, more regional brands to garner space, achieve consumer trial and earn repeat purchases.
Wyatt said the result is increasingly a change in consumer preferences. It’s not about “trading up to higher price points within seltzers and cocktails,” he said, “but instead we’re seeing a shift from traditional spirits and mainstream beer into premium seltzers and cocktails, which is a primary driver of growth for the segment.”
There’s room for growth because spirit-based seltzers represent the second smallest contributor to the RTD category but also happen to be the second biggest contributor—behind premium beer—to RTD growth, according data from IRI’s beverage team. “As the segment doubled, High Noon [from Modesto, California-based E & J Gallo Winery] contributed to more than two-thirds of the growth. It will be interesting to watch this space and ask: ‘Will High Noon sustain this growth? Will other brands capitalize this segment’s growth?’ ”
Positive Push
Several brands are making a push to thrive in c-stores.
Freshie, which is gaining facings and shelf space at a growing number of c-store chains, was “originally crafted out of necessity because there was nothing like it on the market—no organic tequila seltzers made from a small number of organic ingredients,” said Ryne Iseminger.
“We initially created it for ourselves and our friends and to fit our active, fun lifestyle. As we saw it, there was no reason why we couldn’t work, eat a healthy organic meal and then carry those same priorities over to our cocktail of choice,” he said. The drinks debuted in Grapefruit-Guava and Blood Orange-Habanero flavors in an eight-can variety pack, and are the first USDA-certified organic tequila seltzers, according to the company.
“We worked for two years to perfect these flavors,” said Paige Iseminger, speaking of how the brand earned the USDA Certified Organic seal after rigorous analyses. In addition, Freshie is produced in partnership with a Jalisco, Mexico-based certified zero-carbon beverage company.
“We worked for two years to perfect these flavors.”
RTD drink Osena, meanwhile, uses real coconut water with naturally occurring electrolytes and zero sugar. It contains 100 calories per 12-ounce can at 5% ABV. “We wanted to create something we thought was missing for those who wanted to enjoy today and feel good about tomorrow,” said Chris Allen, cofounder of New York-based Osena.
Based on positive response, Osena launched its first variety pack in late 2022. The Islands Collection features three new flavors: Ripe Mango, Divine Guava and Lush Dragon Fruit. “Spiked coconut water is a choice to feel good about because it uses natural ingredients and supports the environment,” Allen said.
In the second half of 2022, Dewey Beach, Del.-based Dewey Beverage put its weight behind Dewey Skinny Orange Crush, a lower-calorie version of its flagship canned cocktail Dewey Orange Crush. The spirit-based cocktail is blended with vodka and triple sec, lemon lime soda and all-natural, freshly crushed orange juice.
Seeking Quality
IRI’s Wyatt said 2023 “should bring additional new product launches and line extensions focused on natural ingredients. He called out real fruit juice as one trend intended to appeal to “consumers’ increasing focus on and demand for quality.”
Wyatt said this development “will most likely include traditional and universally enjoyed cocktails with the premade canned option and subsequent ease of consumption being a key value proposition. Space allocation will continue to be difficult, not just because of the tough economy, but because shelf space is somewhat finite, and retailers will continue to prioritize proven brands that drive a disproportionately high share of growth for the segment.”
“The new slim can format is inspired by the kind of highball glass you’d get at your favorite bar if you ordered one of these cocktails off the menu.”
Premium RTD offerings are only scratching the surface of penetration. According to data from Chicago-based Mintel International, consumers continue to reach for RTD canned cocktails at an accelerated rate, with the category growing 226% over the past six years, “making spirits-based RTDs one of the fastest growing segments across beverage alcohol,” Mintel stated.
Premium ingredients are all part of the allure—a necessity for a growing coalition of consumers. One example is Cutwater cocktails, featuring its “award-winning” vodka, rum or tequila, said Yuseff Cherney, co-founder and master distiller at San Diego-based Cutwater Spirits.
That allure also includes the presentation as much as it does assurance of premium ingredients. “The new slim can format is inspired by the kind of highball glass you’d get at your favorite bar if you ordered one of these cocktails off the menu,” Cherney said.
The goal is “offering consumers an easy upgrade to their usual summer go-to. With new, easy-to-pack slim cans featuring award-winning real spirits as the base, convenience and quality go hand in hand,” Cherney said.
Pouring on the Cocktails
Ready-to-drink cocktails were the fastest-growing alcohol segment in 2022, according to a Drizly’s 2022 Consumer Trend Report, and the alcohol-delivery service anticipates continued growth this year.
“The fact that RTDs are outpacing hard seltzers among ‘most likely to buy more’ canned options underscores a leveling off for hard seltzer that Drizly was among the first to identify in 2021, when hard seltzers’ share of overall adult beverage sales declined for the first time on the platform,” said Liz Paquette, head of consumer insights at Drizly, “That decline, coupled with RTD cocktails’ concurrent meteoric rise, suggests that RTDs may be taking share from hard seltzers.”
Regardless, Paquette said within the Drizly platform, hard seltzers remain a top performer within the beer category but continues to slow the hot growth pace it once established.
“Over the past five years, hard seltzer has grown from a relatively unknown category to the best-selling beer subcategory on Drizly,” Paquette said.
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