Global ready-to-drink (RTD) and ready-to-serve (RTS) market review 2013 edition

Global ready-to-drink (RTD) and ready-to-serve (RTS) market review 2013 edition

Global ready-to-drink (RTD) and readyto-serve (RTS) market review 2013 Edition By IWSR editor-in-chief, Alexander Smith August 2013 Published by Aroq Limited Seneca House Buntsford Park Road Bromsgrove Worcestershire B60 3DX United Kingdom Tel: +44 (0)1527 573 604 Fax: +44 (0)1527 577 423 Web: www.just-drinks.com/market-research/ Registered in England no: 4307068 i

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Table of contents Table of contents... iii List of tables... iv Executive summary... 1 Introduction: Recent and future category performance... 4 Chapter 1 Category drivers... 7 Liquid trends... 9 Format trends... 11 Impact on parent brand... 12 Premiumization... 13 Cider competition... 14 Chapter 2 Industry structure... 16 Chapter 3 Leading markets... 19 Japan... 19 The US...22 Australia... 26 Russia... 30 Ukraine... 32 The UK... 33 Mexico... 39 South Africa... 41 Canada... 45 Brazil...47 New Zealand... 50 Finland...52 Germany... 53 France... 57 Appendix: Global owners and brand data... 59 iii

List of tables Table 1: Top 25 markets for mixed drinks, 2007-2013 (000's nine-litre cases)... 1 Table 2: Top largest growth markets for mixed drinks based on volume growth 2007-2012 (000's nine-litre cases)...4 Table 3: Top largest declining markets for mixed drinks based on volume growth 2007-2012 (000's nine-litre cases)... 5 Table 4: Top FABs brands in Japan, 2007-2012 (000's nine-litre cases)... 19 Table 5: Top long drinks brands in Japan, 2007-2012 (000's nine-litre cases)... 20 Table 6: Top pre-mix brands in Japan, 2007-2012 (000's nine-litre cases)... 20 Table 7: Top FABs brands in the United States, 2007-2012 (000's nine-litre cases)... 22 Table 8: Top long drinks brands in the United States, 2007-2012 (000's nine-litre cases)... 23 Table9: Top pre-mix brands in the United States, 2007-2012 (000's nine-litre cases)... 23 Table 10: Top FABs brands in Australia, 2007-2012 (000's nine-litre cases)... 26 Table 11: Top long drinks brands in Australia, 2007-2012 (000's nine-litre cases)... 27 Table 12: Top pre-mix brands in Australia, 2007-2012 (000's nine-litre cases)... 28 Table 13: Top FABs brands in Russia, 2007-2012 (000's nine-litre cases)... 30 Table 14: Top long drinks brands in Russia, 2007-2012 (000's nine-litre cases)... 31 Table 15: Top pre-mix brands in Russia, 2007-2012 (000's nine-litre cases)... 31 Table 16: Top FABs brands in Ukraine, 2007-2012 (000's nine-litre cases)... 32 Table 17: Top FABs brands in the UK, 2007-2012 (000's nine-litre cases)... 33 Table 18: Top long drinks brands in the UK 2007-2012 (000's nine-litre cases)... 35 Table 19: Top pre-mix brands in the UK, 2007-2012 (000's nine-litre cases)... 35 Table 20: Top FABs brands in Mexico, 2007-2012 (000's nine-litre cases)... 39 Table 21: Top long drinks brands in Mexico, 2007-2012 (000's nine-litre cases)... 39 Table 22: Top pre-mix brands in Mexico, 2007-2012 (000's nine-litre cases)... 40 Table 23: Top FABs brands in South Africa, 2007-2012 (000's nine-litre cases)... 41 Table 24: Top long drinks brands in South Africa, 2007-2012 (000's nine-litre cases)... 42 Table 25: Top pre-mix brands in South Africa, 2007-2012 (000's nine-litre cases)... 42 Table 26: Top FABs brands in Canada, 2007-2012 (000's nine-litre cases)... 45 Table 27: Top long drinks brands in Canada, 2007-2012 (000's nine-litre cases)... 46 Table 28: Top pre-mix brands in Canada, 2007-2012 (000's nine-litre cases)... 46 Table 29: Top FABs brands in Brazil, 2007-2012 (000's nine-litre cases)... 47 Table 30: Top long drinks brands in Brazil, 2007-2012 (000's nine-litre cases)... 48 Table 31: Top pre-mix brands in Brazil, 2007-2012 (000's nine-litre cases)... 48 Table 32: Top FABs brands in New Zealand, 2007-2012 (000's nine-litre cases)... 50 Table 33: Top long drinks brands in New Zealand, 2007-2012 (000's nine-litre cases)... 51 Table 34: Top pre-mix brands in New Zealand, 2007-2012 (000's nine-litre cases)... 51 Table 35: Top FABs brands in Finland, 2007-2012 (000's nine-litre cases)... 52 Table 36: Top pre-mix brands in Finland, 2007-2012 (000's nine-litre cases)... 53 Table 37: Top FABs brands in Germany, 2007-2012 (000's nine-litre cases)... 53 Table 38: Top long drinks brands in Germany, 2007-2012 (000's nine-litre cases)... 54 Table 39: Top pre-mix brands in Germany, 2007-2012 (000's nine-litre cases)... 55 Table 40: Top FABs brands in France, 2007-2012 (000's nine-litre cases)... 57 Table 41: Top pre-mix brands in France, 2007-2012 (000's nine-litre cases)... 57 Table 42: Top global owners of mixed drinks, 2007-2012 (000's nine-litre cases)... 59 iv

Table 43: Top brands of mixed drinks for Diageo, 2007-2012 (000's nine-litre cases)... 59 Table 44: Top brands of mixed drinks for Kirin Brewery, 2007-2012 (000's nine-litre cases)... 60 Table 45: Top brands of mixed drinks for Mark Anthony Group, 2007-2012 (000's nine-litre cases)... 60 Table 46: Top brands of mixed drinks for Suntory, 2007-2012 (000's nine-litre cases)... 61 Table 47: Top brands of mixed drinks for Berklee Capital, 2007-2012 (000's nine-litre cases)... 61 Table 48: Top brands of mixed drinks for Asahi, 2007-2012 (000's nine-litre cases)... 62 Table 49: Top brands of mixed drinks for Brown Forman, 2007-2012 (000's nine-litre cases)... 62 Table 50: Top brands of mixed drinks for Bacardi - Martini, 2007-2012 (000's nine-litre cases)... 63 Table 51: Top brands of mixed drinks for Takara Shuzo, 2007-2012 (000's nine-litre cases)... 64 Table 52: Top brands of mixed drinks for Beverage Brands, 2007-2012 (000's nine-litre cases)... 64 v

Chapter 1 Category drivers Despite the mixed market performances, there are few categories that are as dynamic in terms of innovation and the energy that it brings to the marketplace. RTDs have consistently evolved, adapted and innovated to find new ways of fulfilling consumers needs. Perhaps they became malt-based instead of spirits-based, or launched new flavours, or altered the packaging format. The overall global outlook for RTDs is positive, but there is a definite revolution under way as the focus shifts from the on-trade to the off-premise and the category re-invents itself accordingly, with more sophisticated positioning, more convenient packaging and serve innovation. Debs Carter, marketing director for SHS, which owns WKD, sums it up: Innovation has always been a very important part of the RTD category and has always been greater than in other categories; it s something that consumers come to expect. (But) it s not just about bringing out new flavours; it s also about talking to your consumers in a credible way. It is also about accessing new consumer occasions. Pre-mix drinks have allowed the major spirits companies to access occasions that they had typically been excluded from, such as outdoor picnics, concerts or sporting events. It has brought them through pre-mixes more and more into occasions that were historically dominated by the brewers. Distell head of global marketing for RTDs and ciders Debra Clausen says: There have been and we believe there will continue to be many more RTS offerings launched as spirits producers seek to access new consumers and occasions. The element of novelty is a big feature in attracting consumer attention and encouraging celebration of the everyday a little differently, as a way of growing opportunities for enjoyment. Diageo GB shopper marketing manager, off-trade Natasha Chapman says: The beauty of the pre-mix category is that it removes some of the key barriers that we see in mixed drinks where some consumers are discouraged due to the fact they have to purchase spirits and mixers; you have to know the measures and that buying a bottle of spirits can represent a large financial outlay. Pre-mix allows you to enjoy perfectly mixed drinks, at a very accessible price point, all in one product. All you have to do is open and pour. She adds: We believe that through repositioning pre-mixed drinks and creating greater relevance to the shopper there is a real opportunity to make pre-mix the number one choice for the casual get-together occasion. Given the growing trend for more at-home consumption, the quality, choice and value that pre-mix offer is particularly relevant for consumers Equally, the accessible price point of the range encourages shoppers to trial different types of pre-mixed drinks without having to commit to a full-sized spirits bottle. Beam VP global marketing Anu Goel says: The big evolution we re seeing is the ability for spirits to access multiple occasions. Historically, spirits used to be a distinct category and occasion from beer and wine, but RTD 7

Chapter 2 Industry structure The great strength of the RTD and RTS sectors is that there is a broad array of participants from the spirits, wine and brewing industries. This guarantees a tremendous critical mass of investment around the category. It also ensures a tremendous amount of competition. Carter says: The other thing that s really important with regards to that is that it s fantastic to see some of the really big spirits companies playing in that [the pre-mix] area. That s great for us as a total category that the likes of Diageo and Bacardi are investing in the wider RTD market and we really welcome that. Diageo is the largest pre-mix supplier with a xxxx% share of the global market (domestic). This is down from an xxxx % share just five years ago. Diageo s pre-mix brands have seen a xxxx% CAGR decline between 2007 and 2012. The rate of decline slowed last year, with Diageo s pre-mix sales falling by xxxx% to xxxxm cases. Diageo s flagship Smirnoff Ice brand, which accounts for xx% of group s pre-mix volumes, saw a xxxx% decline between 2012 and 2011 to xxxxm cases. This represents a considerable improvement over the xx% CAGR between 2007 and 2012. Diageo s Bundaberg Long Drinks, which sell chiefly in Australia, also stabilised last year around xm cases. The brand had a xxxx% CAGR between 2007 and 2012. The only real positive development for the company was the impressive performance of Captain Morgan Long Drink. The brand increased by xxxx% in 2012 over 2011 to xxxx m cases. Look for this to continue given the strength of the parent brand. Japan s Kirin is the second-ranked pre-mix supplier after a xxx% rise in 2012 to xxxxxm cases, which equates to an xxx% share of the global market in 2012. Hyoketsu is the largest brand in Japan at xxm cases, following a rise of xxx% in 2012 over 2011. Kirin may be onto another winner with Hon-Shibori, which increased by xxx% to xxxxm cases in 2012 over 2011. Another Japanese company, Asahi, ranked third with an xxx% share of the global market. Asahi saw pre-mix sales rise by xxx% in 2012 over 2011 to xxxxm cases. Asahi increased its presence in the RTD market with the acquisition of Independent Liquor in August 2011 for $xxxbn. Independent makes the Woodstock RTD brand, leader in both New Zealand and Australia. The new ownership hasn t necessarily changed the brand s fortunes. Woodstock RTDs fell by xxxx% in 2012 to xxxm cases. Independent s Full Moon RTD line has been showing dynamic growth, however, rising by xxxxxxx cases in 2009 to hit the xxxm-case mark in 2012. Asahi s other main brand lines, Junka Shibori and Kristov Vodka Cruisers, also both declined by around x%. Japan s Suntory had x% share of the global pre-mix market in 2012. The group's overall sales edged up marginally, rising by xxx% in 2012 to xxxxxm cases. Suntory s flagship premix range, Minus 196, increased by x% to xxxxxm cases. Suntory Calori has been steadily declining, falling from 16

Chapter 3 Leading markets Japan Table 4: Top FABs brands in Japan, 2007-2012 (000's nine-litre cases) Brand Name CompanyName Vol2007 Vol2008 Vol2009 Vol2010 Vol2011 Vol2012 Total Total Hyoketsu Kirin Brewery Minus 196 Suntory Horoyoi RTD Suntory Suntory Calori Suntory Junka Shibori Asahi Cocktail Partner Kyowa Hakko Can Chu - Hi Sour Takara Shuzo Slat Asahi Takara FABs Takara Shuzo Can ChuHi Takara Shuzo Hon-Shibori Kirin Brewery Calpis Sour Asahi Zima Molson Coors Smirnoff Ice Diageo Choya Umessh Choya Others Source: The IWSR Table 4: Top FABs brands in Japan, 2007-2012 (000's nine-litre cases) (Continued) Brand Name % Chg 11-12 CAGR 07-12 Share 11 Share 12 Total Hyoketsu Minus 196 Horoyoi RTD Suntory Calori Junka Shibori Cocktail Partner Can Chu - Hi Sour Slat Takara FABs Can ChuHi Hon-Shibori Calpis Sour Zima Smirnoff Ice Choya Umessh Others Source: The IWSR 19