RTD Alcohol Beverage Market
The RTD category of the alcohol beverage market in the US in 2020 is estimated to be $3.9 billion with an annual growth rate of 5.4%. While no preexisting data for this market exist, we were able to triangulate an estimate based on available data for North American market. The market segment is experiencing rapid growth due to factors arising from consumer demand. Key players are moved to innovate their production in response to the growth trend.
Size and Growth Rate of the RTD category
- The market size of the RTD category in the US in 2020 is calculated to be $3.9 billion.
- CAGR of the RTD category is predicted to be 5.4%.
- Millennial consumers are switching from beer and wine consumption which is driving the demand for RTD alcohol.
- The US and Japan are the two largest markets in RTD segments.
- The growing consumer demand for RTD alcoholic beverages can be attributed to a combination of factors : growing health awareness, demand for sophisticated flavors and increased spending capacity.
- Colorful and slick packaging of RTD beverages is cited as a factor in their growing popularity.
- This trend is noted by brand owners, who note that the spike in demand is driving innovation in recipes and ingredients.
- White Claw, a brand launched by Mike's Hard Lemonade in 2016, leads the hard seltzer sales thanks to its innovative marketing approach: gender-neutral and health-conscious.
- With COVID-19 affecting many industries, the outlook for RTD segment is uncertain. Two of the biggest players on RTD market have withdrawn or revised their fiscal projections in light of COVID-19.
The market size for the RTD segment was not readily available from publicly available resources, so we used past data and CAGR to triangulate the market size for 2020. We used the data available for North America, including the RTD market size and total alcoholic beverage market size. This data was used to triangulate the share of RTD in total alcoholic beverage market in 2020.
We then assume that the share of RTD in total alcoholic beverage market in the US is proportional to the share of RTD to alcoholic beverage market in North America. This is done as US is the largest share of the North American alcoholic beverage market, constituting 59% of the market. This can be found by dividing the US total alcoholic beverage market size by its North American counterpart:
$259,148,000,000 / $435,194,973,000 = 59%
According to MarketWatch, the North American market size for the RTD segment in 2018 was US$ 5,883.8 million with a CAGR of 5.4% during 2019 – 2027. We used a CAGR calculator the 2018 market size by CAGR for 2 time periods to arrive at our result.
2018 Market Size: RTD segment of Alcoholic Beverage Market = $5,883.8 M; CAGR of 5.4%
- $5,883,800,000*(5.4%)*(2 years) = $6,536,407,560
Since the US market share is 59% of the North American market, the RTD segment in the US can be found as follows:
$6,536,407,560 * 59% = $3,856,480,460.4 or $3.9 billion.
To arrive at a CAGR number, we assume that the trends describing the RTD segment in North America are similar to the RTD segment in the US. Therefore, we predict that the growth rate of RTD segment would closely resemble the 5.4% CAGR we see in North America.