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Even as Gen Z swaps parties for pilates, drinks giant Diageo is keen to double down on the booming market of bottled and canned cocktails.
Sir Dave Lewis, who leads the drinks giant behind Johnnie Walker whisky, Guinness stout and Smirnoff vodka, is eyeing the so-called ‘ready to drink’ (RTD) market as part of his turnaround mission.
Known for his cost-cutting and radical restructuring when he ran Tesco, ‘Drastic Dave’ wants Diageo to be more innovative with ready-mixed spirits - especially as consumers face a cost-of-living squeeze.
Competition is fierce in the RTD market, which is worth over £300m, according to market researchers Worldpanel by Numerator.
Sales have grown over 17 per cent in two years, which translates to an extra 330,000 shoppers picking up cocktail tinnies instead of buying beer and wine.
Lewis credits Diageo as having ‘created this category’ when it launched Smirnoff Ice - a popular vodka and lemonade mix in 2000. Its current selection also includes cans of Gordon's gin and tonic and Casamigos margaritas.
But Diageo’s share of the RTD market has fallen from a peak of 25pc in 2008 to below 10pc as high-alcohol upstarts like BuzzBallz gain traction.
While it may seem contradictory, experts say this trend goes hand-in-hand with young consumers viewing healthy lifestyles as increasingly important.
Steve Wilson, boss of alcohol-free drinks firm DioniLife and a former innovation director at Diageo, said: ‘What we are seeing is a shift from volume drinking to intentional drinking. People are going out less frequently, but when they do, they are choosing drinks that feel worth the occasion.
Diageo is facing stiff competition from the likes of Moth Cocktails
‘It is about intensity and experience rather than excess, and that raises the bar for the industry in terms of quality,’ Wilson adds.
The category is also being buoyed by consumers of all ages drinking alcohol earlier in the day and finding it easier to track their alcohol intake with mixed drinks, according to James Rhodes, consumer insight director at Worldpanel by Numerator.
The market has changed ‘dramatically’ in the past few years, said Rob Wallis, the co-founder of Moth cocktails.
‘Consumers now expect something that tastes like a cocktail you’d be served in a bar,’ he added.
Products in this range sell around the not so cheap £4 mark.
A boom in tequila has seen renewed interest for cocktails such as the Paloma and Spicy Margarita, while classics like espresso and pornstar martinis remain popular.
M&S says it was the first to launch a cocktail tinnie in the UK with its 1986 range, including rum & cola, gin & tonic and Scotch whisky & American Dry.
But tastes have changed. Now tequila is seeing ‘huge momentum’ and margarita sales are up 75pc on last year, according to Caroline Thompson-Hill, head of beers, wines and spirits at M&S Food.
The retailer says it sells 60 cocktail cans every minute which adds up to 15 million sold each year - enough to stretch from London to Greece if put end to end.
But nostalgia for ‘alcopops’ is also driving sales of the bottled cocktails popular in the 1990s. (Fervent demand for the sickly mixtures reminiscent of this era can be seen at the 90s’ themed cocktail bar in Soho, Bunga Bunga, whose best-sellers include Bacardi Breezers.)
Craig Chapman is head of brand at Global Brands, which owns VK, Hooch and All Shook Up. He says the business is cashing in on millennials who want to relive hazy nights of student parties - far from the ‘clean girl’ Gen Z social media trends of today.
He points to a new ‘VK Squashka’ drink, which is a vodka and juice mix sold in a carton. This was inspired by the 'long-standing university tradition where students mix vodka with fruit squash as part of the pre-drinks ritual before a night out,’ he says.
‘For many drinkers now in their late twenties and thirties, these were the drinks that defined their first nights out and house parties, and there is clear appetite for familiar brands and flavours that tap into that sense of fun and nostalgia,’ Chapman adds.
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