The Tequila RTD (ready-to-drink) market has been on the rise for the past few years and shows no signs of slowing down. By 2027, the U.S. ready-to-drink market is expected to reach $21.1 billion, with tequila-based RTDs driving a significant portion of this expansion. With growth comes the opportunity for new brands to capitalize on this upward trend. A way growing brands can immerse themselves in the trend is by crafting premium mezcal or tequila RTDs of their own!
Why Invest in the Tequila RTD Market?
Data directly from The IWSR states the tequila RTD has witnessed remarkable year-after-year growth. This even outpaces other spirit-based RTDs. In fact, out of all spirit-based RTDS, tequila stands as the second most popular in the United States. These figures are driven mostly by the younger generations, such as Millennials and Gen Z.
Furthermore, the U.S. RTD market as a whole is moving on from volume and prioritizing quality and value. While malt hard seltzer has seen its moments in the spotlight, there has been a decline in sales recently. Experts say this decline may be the result of a rise in cocktails and spirit-based RTDs. With a higher demand for ready-to-drink cocktails, entrepreneurs and growing businesses can find success by getting a new label out there and on the shelves.
The Need-To-Know on Consumer Trends
Entering the Tequila RTD market can be a bit of a challenge for brands who do not clearly understand the demographic they are marketing towards. Since Millennials and Gen Z are driving the growth in this trend, it is crucial to market toward their needs and wants.
These groups of spirit aficionados favor convenience and variety, and may have a health- and eco-conscious edge. Furthermore, Gen Z and millennials are attracted to low-calorie, low-sugar, yet flavorful RTDs. Flavors such as margarita, watermelon, lemonade, and strawberry are common tastes that resonate with these generations.
Notably, agave-based spirits, including tequila and mezcal, are experiencing a surge in popularity due to their versatility and unique flavor profiles. In fact, 41% of consumers now prefer tequila as their RTD base, a number that jumps to 60% among Gen Z drinkers. The popularity of tequila is mirrored by agave-based spirits as a whole, which are forecast to grow at an 11% compound annual growth rate (CAGR) from 2022 to 2027.
How to Make Your Tequila RTD Stand Out
Based on our experience in creating Tequila RTD brands, here are some steps we recommend you follow.
Choose Premium Ingredients
As we said, consumers have recently begun to value quality over quantity, giving rise to premium products. That said, using authentic, high-quality tequila as the base spirit for your RTD is a must-have. To further excite your audience, make it a point to avoid artificial flavors and additives. These seamlessly small parts of the product creation can play an active role in gaining support from those seeking a more health-conscious option.
Craft a Unique Tequila RTD Flavor
Flavors like cucumber-mint and jalapeño-pineapple can add a creative edge to your tequila RTDs, helping you stand out from the competition. Combinations as such offer classic flavors with refreshing twists that create a satisfying blend and a unique experience. Businesses can even consider offering seasonal and holiday RTDs to entice consumers to purchase more during the most lucrative seasons.
Offer High-ABV Options
High-ABV options can be attractive to younger generations of drinkers. One study found that tequila RTD products with higher ABVs (above 7.5%) are gaining traction. Some newer canned cocktails are even nearing 20% ABV. This provides an opportunity to target consumers looking for a stronger, more authentic cocktail experience in a convenient format.
Design Attractive Packaging
Attractive packaging can stand out on saturated shelves making it a crucial part of the process. Packaging is the time you get to be creative, represent your brand, and drive more sales. The best designs will tell a story, truly reflecting the common saying “A picture paints a thousand words”.
New spirit labels and RTD brands can enhance their packaging by partnering with professionals such as Tequila & Spirits Mexico. With our help, you can gain expert insights, and technical experience, and ensure your label design aligns with your brand and resonates with the target audience.
Broad Steps for Starting a Tequila RTD Brand
Step #1: Make sure you are doing your due diligence and researching the trends. Information on rising trends can help you understand your target audiences’ preferences, helping you craft a tequila RTD that resonates with them.
Step #2: Collaborate with mixologists and flavor experts. They can guide you to develop a lineup that balances classic offerings like margaritas with bold, modern twists. Consider seasonal and regional flavor trends to keep the product fresh and exciting.
Step #3: Craft a brand story promoting quality, authenticity, and flavor. Use premium branding and packaging to align with the high-end positioning of your product. Creative and eye-catching designs can further enhance the brand’s appeal and attract the attention of the consumer.
Step #4: Make a strategic distribution plan. Don’t put all your eggs in one basket. Businesses should learn to use a multi-channel approach to reach their audience. While retail remains dominant for tequila RTD products, consider expanding into on-trade channels such as bars and restaurants as well. These locations are ideal as tequila-based cocktails are already popular.
Overcoming the Challenges with The Help of TSM
The road to success in the tequila RTD market is not without its hurdles. Regulatory challenges, particularly around labeling and alcohol content, must be navigated carefully. Additionally, concerns over sugar content and premium quality require proactive solutions to meet consumer expectations. Yet these challenges also present opportunities; it is just a matter of learning how to overcome them.
Tequila & Spirits Mexico makes an exceptional partner for anyone looking to craft their own tequila RTD product and brand. With a deep-rooted knowledge of traditional production methods and the rich heritage of tequila, our team provides invaluable insights into quality and authenticity. Don’t get overwhelmed by all the regulations and pieces of design and production, let us handle that for you. Learn more about Tequila & Spirits Mexico’s tequila RTD services by visiting our website today!