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Premixed cocktails steal share from beer and hard seltzer, propelling surging growth

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Premixed cocktails were the fastest growing liquor category in 2021, stealing share from beer and hard seltzer.

Sales of ready-mixed cocktails increased by 42.3% to $ 1.6 billion compared to a year earlier, according to the Distillered Spirits Council of the US. Ready-to-drink cocktails were next after vodka in terms of volume consumption, beating American whiskey, tequila and mezcal and rum.

“We think it comes from beer and hard seltzer, although consumers, as they go out more, also like the convenience of liquor-based RTDs,” Christine LoCascio, head of public policy at DISCUS, said at the trade group’s annual financial briefing Thursday.

“I think it’s a combination of things, but with the off-premise sales also remaining stable, I think people are still buying products to make cocktails at home,” she added.

Beer consumption has been in a downward spiral for years as consumers choose to drink less alcohol or choose to drink cocktails or hard seltzer instead. And after several years of skyrocketing sales for tough seltzer, the category sees the growth rate stabilize. Euromonitor International estimates that the U.S. hard seltzer sales category only rose 35.1% in 2021 after rising 64.1% in 2020 and 126.5% in 2019.

Ready-to-drink vodka sodas or gin and tonics have appealed to consumers looking for a stronger flavor or more alcoholic beverage than hard seltzer. The category also has greater variety, ranging from palomas to whiskey sours to margaritas.

The major players in the alcohol industry have already invested in the category, either making their own brands or snatching small brands. Anheuser-Busch InBev bought Cutwater Spirits, while Johnnie Walker distillery Diageo has launched offshoots of some of its top brands, such as Ketel One Botanical and Crown Royal.

Still, ready-mixed cocktails are a small part of the total spirits industry, accounting for less than 5% of its $ 35.8 billion turnover. They are also a small fraction of the ready-to-drink category, which also includes hard seltzers, sodas and lemonades. According to market researcher IWSR, spirits-based canned cocktails account for 8% of the market volume, overshadowed by the share of flavored malt beverages of 91%.

As canned cocktails become more popular, the spirits industry has been pushing for states to lower their excise duties on spirits-based beverages. Excise duties have been imposed on alcohol dating back to the early days of the United States, but since the lifting of the ban, liquor has been taxed higher than other forms of alcohol by the federal government and states. Alcohol high alcohol content carries a taboo that distinguishes it from beer and wine in the eyes of some lawmakers and watchdogs.

“Reducing or making the tax rates on liquor-based RTDs fairer and more competitive will create greater consumer access to these products,” said DISCUS CEO Chris Swonger. “We have seen craft distilleries that have just entered the market and see liquor-based RTDs as prohibitive costs because of the tax rates.”

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