Ready -to -drink beverages, a threat to beer kingship

A riddle: it has bubbles, low alcohol content, combines different flavors and is refreshing. If you answered “beer,” you’re wrong, but not so much. We are actually talking about Hard Seltzer, a new type of Ready to Drink (RTD), which makes up a threat to the beer business. “The category emerged a few years ago and now one of the most disruptive in the alcoholic beverage market, comparable to artisanal beverages”, They told the industry.

The trend is starting, but very clear, they say in the sector. The pioneer in Argentina was the Cepas group, which in the early 90s launched Pronto Shake and later Dr. Lemmon, two brands in force. The move is adding players, including two large brewing groups (Ab Inbev and CCU), distilling companies and wineries. Even Coca-Cola launched Topo Chico worldwide, the first alcoholic beverage in its entire history.

The alcoholic beverage market is leading beer, with a 58% share, indicates a report from FADA (Argentine Federation of Distillates and Appetizers). In second place was alcohol (32%); cider, sparkling wine and fernets (2% each); Y the RDTs, which already have 1% of the market. The percentage is still low, but it is higher among the most popular spirits with a long history, such as whiskey, gin, vodka and rum.

As a pioneer, Cepas now has the most complete catalog of brands and types of ready-to-drink beverages, such as canned versions of Bacardí rum and Gancia One. His last release was Meet, based on carbonated water and lime, grapefruit or mango juice, with an alcohol content of 4.5%. Like beer. Meet is a hard seltzer that the company makes at its plant in Admiral Brown.

“Consumption of RTD began during a worldwide pandemic. To people confined to their homes, all of these turnkey measures offer the possibility to enjoy a distillate that is ready and ready to consume” , illustration by Guadalupe Fernández Burgoa, a senior executive of the English group Diageo. This company launched last year Smirnoff Ice, a vodka cocktail dissolved in three flavors: lemon, green apple and raspberry.

“All three have a 5%graduation”, the expert clarifies. On the other hand, he explained that this type of drink is aimed at “break the barrier to entry so the public can try other types of distillates”. Another new thing is that distribution is mainly concentrated in supermarkets and self-service stores and not so much in kiosks and local stores. Fernández Burgoa acknowledges that hard seltzers and RTDs compete directly with beers. “The content and formats of alcohol have almost identical characteristics,” he said.

The brewing giants noticed a few years ago. Hard seltzers are a boom in the United States, emphasizes Eugenia Guttmann, category marketing manager at Peñaflor, and “this is the first country where it started.” Prepared beverages represent 6% of the consumption of alcoholic beverages, according to the International Wine & Spirits Report. In Australia (8%) and South Africa (4%) they have also made good progress.

Guttmann recalled that in the United States three major brands led the charge: White Claw, Truly and Spiked Seltzer. “The latter was bought by the Ab Inbev group in 2016”, He pointed out. The company owns Quilmes and controls Budweiser, Corona and Stella Artois, among other well-known brands. Last October they entered the RTD business with Mike’s, a drink with sparkling water, vodka, sugar and lemon. “The brand is already in the United States, but in the country it is made using a different recipe”, They explained.

For its part, Chilean CCU (Heineken, Imperial, among others), the other giant in the beer sector, presented Hard Fresh, with characteristics very similar to other offerings. In all cases, the manufacturers acknowledge that the products are at the experimental stage, but at the same time they make sure they have plans to add new brands and types to their portfolio. “Mingo was unveiled in December last year and the priority was to complete the supply of marketing channels and introduce it,” Guttmann said.

Peñaflor and Diageo are on the same side. The wine group, one of the 10 most important in the world, produces and bottles some of the English company’s products at its plant located in Mendoza province.

The case of Coca-Cola is remarkable. Topo Chico appeared in Mexico and was named after a mountain in that country which captures the highest purity of water. From the company they explained that the launch was the initial part of an expansion plan to compete within the category. “The arrival of Topo Chico has been postponed due to the pandemic. However, before the end of the year we will present a new brand”, they advance.

Brewers, wine makers, but also large spirits makers are focused on hard seltzers and RTDs. Pernod Ricard, for example, has not yet entered the market. The same goes for Dellepiane (Three Feathers). Matías Ugarte, a senior executive of the firm, pointed out that they are examining the evolution of the consumption of appetizers and gin, which is also growing.

“Gin is the trendy drink and it’s also related to the pandemic,” Ugarte said. In Argentina, approximately 350 brands compete in this segmentbetween industrial and artisanal. The executive points out that there are many canned versions of this drink, another trend that continues to grow. Regarding the hard seltzer, Ugarte agrees that the move to the United States has begun. But he clarified that “in Brazil right now it doesn’t work”.