Canned Cocktails

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Canned Cocktails

KEY TAKEAWAYS

  • Currently, the North American canned cocktails market is estimated to be valued at $264.19 million.
  • "In terms of packaging, the cans segment is estimated to ascend at the fastest CAGR over the forecasted period due to growing demand for convenient and easy-to-carry, on-the-go packaging. In addition, cans are allowed in public places like swimming pools and parks where bottles are generally restricted. Moreover, young consumers prefer metal cans as they are more portable and do not break easily."
  • The majority of states have statutory provisions that allow for out-of-state manufacturers to ship alcoholic beverages directly to consumers.
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INTRODUCTION

Though some market research data combine the hard seltzer and canned cocktails market into one, the insights included within this project are specific to canned cocktails. According to estimates, "the spirit-based type segment held the largest revenue share of over 43% in 2020" and is expected to continue to dominate the segment. Further, while there are a myriad of regulations which vary from state to state surrounding the delivery of alcoholic beverages to consumers, an overview of these regulations has been provided within the brief below.

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Canned Cocktail Market Overview

  • Globally, according to Grandview Research insights, the ready-to-drink canned cocktail market was valued at $714.8 million in 2020 with a projected compound annual growth rate (CAGR) of 12% through 2028.
    • Given the projected CAGR, the 2021 value of the global market stands at $800.58 million.
    • The data from Grandview indicates that the North American share of the market is approximately 33%, thus the current North American market share can be calculated at $264.19 million. (800.58 x 33%)
    • Of note, only one market research report was utilized to present the market size as other reports uncovered during the research process included the hard seltzer segment in their overall data.
  • Though the 2017 value of the US-only market was $134.5 million, as seen in the graphic, unfortunately the US-specific CAGR data is blocked behind a paywall and cannot be accurately calculated and/or estimated.
  • One of the market's key drivers is a desire by consumers to be more health conscious which leads to their choosing ready-to-drink cocktails with flavors like "lemon, cranberry, orange, and passion fruit, which have low alcohol content, ranging from 4 to 7%. Therefore, low Alcohol By Volume (ABV) drinks have been gaining traction over the years. Gin and tequila-based products, in particular, have a high demand among consumers."
  • "In terms of packaging, the cans segment is estimated to ascend at the fastest CAGR over the forecasted period due to growing demand for convenient and easy-to-carry, on-the-go packaging. In addition, cans are allowed in public places like swimming pools and parks where bottles are generally restricted. Moreover, young consumers prefer metal cans as they are more portable and do not break easily."
  • Globally, "the spirit-based type segment held the largest revenue share of over 43% in 2020 and is expected to maintain dominance over the forecast period. Spirit-based beverages usually contain up to 5% alcohol mixed with other ingredients like juices and are available in single-serve packaging and various flavors. Vodka, gin, tequila, whiskey, and rum are the most commonly used spirits. The growing demand for low content alcohol-based flavored drinks due to the rising health concerns is anticipated to drive the segment over the forecasted period. These drinks offer a wide range of variety, such as cocktails infused with ginger, rose, and lavender along with spirits, which, in turn, has increasingly made them the most preferred alcoholic beverage among consumers."
  • "Wine-based cocktails is projected to be the second-fastest-growing segment from 2021 to 2028. Consumers perceive wines to be healthier than spirits and malts as they usually contain fruit juices, such as grapefruit, oranges, passion fruit, lemon, mango, and berries, which drives their demand. It also resonates with changing consumer trends towards leading a healthy lifestyle by shifting to beverages with low-ABV content. This has propelled manufactures to introduce healthier beverages, that are gluten-free, low-carb, contain organic/natural ingredients, and have low alcoholic content. For instance, Miami Company offers several organic wine-based cocktails in its product portfolio."
  • According to Allied Market Research, "emerging technologies in canning process in cocktails has driven the growth of canned cocktail market. In addition to this, a greater emphasis on consumption trends like sugar-free cocktails continues to get prospects of canned cocktails market. Canned cocktails with fruit additives continues to be the first preference for consumers. This is the reason they are majorly produced. Also, canned cocktails with caffeine ingredients shall be able to generate huge capital during the forecast period."
  • In North America, can sizes of 250-300 ml are expected to be the most popular over the next decade.
  • According to trends forecaster WGSN, data indicates "there’s been steady growth in the category of RTD’s, but the trend for RTD cocktails has accelerated in the wake of the coronavirus pandemic, with sales growing exponentially, as consumers are unable to visit bars and restaurants. While the RTD category was initially created and an on-the-go solution, a majority of buyers are turning to them as convenient in-home solutions to unwind and relax."
  • In December 2020, "Brown-Forman Corp. announced an exclusive long-term partnership with Pabst Brewing Company, for the sales, supply, and distribution of Brown-Forman’s Jack Daniel’s Country Cocktails brand within the U.S. and in domestic military markets."
    • With a planned effective date of April 1, 2021, the exclusive partnership "will create greater scale for Jack Daniel’s Country Cocktails through access to Pabst’s supply chain capabilities as well as new points of distribution and give Pabst the exclusive rights to sales and distribution of Jack Daniel’s Country Cocktails and any future Jack Daniel’s flavored malt beverages."
    • Brown-Forman's production facilities include "operations in Louisville and Versailles, Kentucky; Lynchburg, Tennessee; and Windsor, California. Our main tequila production facility is at Casa Herradura in Amatitán, Jalisco, Mexico. (We) have production facilities in France and Ireland and contract production in Australia, Finland, and the Netherlands. The Brown-Forman Cooperage operation in Louisville is the world’s largest producer of whiskey barrels. We also operate distribution companies in a number of markets where we sell directly to retailers and wholesalers."
  • Other leaders in the category include Bacardi Limited, Diageo plc, and Anheuser-Busch InBev (AB InBev).
    • Bacardi's global headquarters is located in Hamilton, Bermuda with production facilities in locations like Cataño, Puerto Rico, and in the US, Scotland, Italy, France, Spain, Germany and Mexico.
    • Diageo's production and supply facilities are located across the globe, including in Cambus Cooperage; Scotland, Ciroc — The house of Villevert, France; Clynelish Distillery, Scotland; Cragganmore Distillery, Scotland; Dalwhinnie Distillery, Scotland; Diageo London Office — 7HQ, England; Don Julio Distillery, Mexico; Glenkinchie Distillery, Scotland; Glendullan Distillery, Scotland; Glen Ord Distillery, Scotland; Ketel One Nolet Distillery, Netherlands; Lagavulin Distillery, Scotland; Menstrie — Archives, Scotland; Mortlach Distillery, Scotland; Royal Lochnagar, Scotland; Strathmill Distillery, Scotland; Talisker Distillery, Scotland; Teaninich Distillery, Scotland; and Woodside — Innovation lab, England.
    • In North America, AB InBev has production facilities in St. Louis, Missouri and Toronto, Canada.
  • Diageo acquired the Loyal 9 Cocktails portfolio of products in April 2021.
  • In 2020, AB InBev acquired the Goodridge and Williams portfolio of products including their canned cocktails.

E-Commerce and Alcoholic Beverages

The laws of each state in the United States and its territories dictate the ability to ship alcoholic beverages to consumers. Time constraints of the research do not allow for the specific review of each state. As such, an overview of related guidance is provided below though statutes within each state should be reviewed individually, possibly with the assistance of a legal expert, to ensure accuracy and compliance.
  • It is possible that some statutes have changed or been updated from the above. As such, additional source data provides the following state-specific guidance:
    • "Alabama: There are no exceptions in the state of Alabama. The delivery of alcohol from any source is strictly prohibited. In certain cases, residents can make a special request for an order, but the request must be reviewed by the Alabama Alcohol Beverage Control Board."
    • "Mississippi: There are no special cases or exceptions of any kind when it comes to the delivery of alcohol in Mississippi. Delivery is completely illegal from any source."
    • "Utah: This state has the exact same rules regarding alcohol delivery as Mississippi. There are no exceptions whatsoever; delivery of alcohol is illegal."
    • Kentucky: Some of the strictest laws regarding alcohol delivery are in Kentucky. There are many counties that are dry, meaning there can be no alcohol sold at all. Deliveries are prohibited both out of state and in the state. The one exception is that some wineries can acquire a permit that allows them to deliver wine to residents.
    • Delaware: In this state, you cannot deliver alcohol, with one exception. If you purchase alcohol from a store or restaurant, they can ship it directly to your house. It can only be sent to the person who is buying the alcohol, and you must be a Delaware resident.
    • Rhode Island: The rules for alcohol delivery are similar to those of Delaware. If you are a Rhode Island resident, you can purchase prepackaged alcohol from craft-alcohol businesses. These businesses are allowed to ship your purchase to your house.
  • Further, Saucey (an e-commerce liquor store shipping to 22 cities across the country) states the following for ten other states:
    • "Alaska: Alaska is very relaxed with its delivery laws, but there are different regulations that vary by city and county."
    • "Arizona: While this state is now also very relaxed, they weren’t always. Since 2017, they removed a rule which placed a limit on the number of bottles that distributors could send to consumers, which made things much easier."
    • "California: It comes as no surprise that the huge state of California has the largest market for alcohol delivery in the country. Even with in-state fulfillment, the laws are extremely relaxed."
    • "Florida: Similarly to California, Florida also has very relaxed laws regarding delivery. They are also in the top five states for having one of the largest markets."
    • "Minnesota: This state is a bit stricter with its delivery laws. They limit the number of permitted sales for alcohol with companies and distributors that can ship directly to residents."
    • "Missouri: The laws in Missouri are complex and a bit strict. For example, they allow in-state shipments of alcohol but do not allow out-of-state distributors to ship alcohol to its residents."
    • "Nevada: If you want a state that has very loose laws regarding alcohol delivery, Nevada is the state for you. Companies can ship a certain amount of alcohol without having a permit."
    • "New Jersey: This state is focused on equality among small businesses and big distributors. The rules are different from other states because they allow small brands to ship directly to their customers but prevent big brands from doing the same."
    • "North Carolina: This state does allow alcohol delivery, but they have two sets of rules. These rules are separated by on-site and off-site purchases."
    • "Ohio: Here, the rules are somewhat similar to those of New Jersey. Ohio allows alcohol delivery, but not if you are a producer that makes more than 250,000 gallons of alcohol."
  • During the pandemic, "shops with little or no online presence needed to set up a web store and sort out an on-demand delivery/pick up program, in some cases literally overnight. Companies like Drizly were able to help shops gain this online presence, growing their number of retail partners from 1,800 in early March 2020 to over 4,000 by year-end. This is a big deal: The immediate ability to create an online presence helped many businesses continue to serve existing customers as well as reach new ones. And many states, like Georgia, Arkansas, and Ohio, which previously didn’t allow any form of delivery service, legalized it, giving shops in these states the opportunity to build a program either in partnership with a delivery app, or on their own."
  • Additional e-commerce considerations include taxation. According to Seven Fifty, "Sales tax collection for these local sales remains straightforward … until recently. A wave of marketplace facilitator laws have added additional complexity for shops working with on-demand delivery platforms. Jeff Carroll, general manager for beverage alcohol at Avalara, a tax compliance company, explains that these laws are beginning to transfer the burden of collecting and remitting sales tax from the retailer to the service provider. He suggests that retailers working with these companies ask lots of questions to understand how this is being handled now and in the future as they may need to make adjustments to their own sales tax reporting processes."
  • Currently, the alcoholic beverages cannot be shipped using the US Postal Service, though "many states allow retailers to use common carriers such as UPS and FedEx to reach customers within their state lines. Where allowed, intrastate shipping presents an opportunity for smaller specialty retailers to introduce their shop and selection to a larger audience without wading into the full thicket of compliance and taxation complexities required to ship across state lines."
  • According to Seven Fifty, "white label storefronts offered by companies such as Barcart, Speakeasy, and Passion Spirits are set up to give the impression that customers are purchasing a specific product directly from the producer’s branded website. Emerging platforms like these have much in common with e-commerce marketplaces such as Vivino and ReserveBar that act as one-stop shops for multiple brands. While giving the appearance of a DTC transaction, they are all three-tier compliant, with the actual sale completed and fulfilled by a retailer who purchases the product from an in-state distributor. In that sense, they are similar to on-demand delivery platforms, but often with an emphasis on premium service over speed."
  • Analysis from Freight Run suggests, when shipping, the use of "strong cardboard boxes that have trays inside of them that provide sections for each bottle. This will keep the bottles separate and prevent them from smashing into one another."
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RESEARCH STRATEGY

For this project reviewing the canned cocktails market and regulations surrounding the shipment of alcohol sold via e-commerce, the most reputable sources of information available in the public domain were leveraged including data from sources like Grandview Research, and the National Conference of State Legislators, as well as trade resources like Seven Fifty, and corporate websites.

Please note that some data has been provided verbatim from original sources due to the proprietary nature of said information and efforts to avoid any misinterpretation of the analysis presented.
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