In the world of non-alcoholic and RTD beverages (ready to consume without the need for preparation), demand is being led by Generation Z, young people aged 21 and older, who are also driving innovation in flavors, formats and packaging.
Within the non-alcoholic beverage market, preferences focus on energy drinks, fruit flavors and additional functional benefits. Additionally, premium pre-mixed cocktails and seltzers continue to be preferred.
“The RTD started as a convenience proposition, but now consumers expect the same quality in a ready-to-drink beverage as they would get from a mixologist,” Melanie Batchelor, CEO of Campari America, said in a Food Institute article.
The latest data from Circana, a market behavior and research firm, indicates that preference in beverage presentation has also changed. Now, young people opt for packs or sixes of drinks that contain a mix or variety of flavors.
In fact, these types of presentations stand out as the best-selling RTD format, surpassing single-flavor packages.
The analysis firm adds that to meet consumer demand, brands are innovating with crossover products and an increasing number of non-alcoholic brands are venturing into options already with alcoholic content.
Ready-to-serve cocktails, among preferences
Generation Z is also attracted to ready-to-drink (RTD) cocktails and hard seltzers. This last category, which has more than tripled since 2018, its sales amounted to 10.3 billion dollars in 2023.
“Today’s alcoholic beverage consumers prioritize convenience and desire innovative experiences,” Scott Scanlon, executive vice president of alcoholic beverages at Circana, said in a statement.
Given this trend, the industry is aligning itself with the values of younger generations, who seek options and experiences other than conventional ones, at the same time, they are increasingly concerned about their health and well-being.
Therefore, said Scott Scanlo, brands that want to remain competitive should explore opportunities to improve their offerings, incorporating top-quality ingredients and packaging, without neglecting spontaneity in flavors.
Another trend among Generation Z is demand for beer, including flavored options, those imported from Mexico and budget brands.
For the Circana firm, in the beverage sector, alcoholic beverages have shown the lowest inflation in recent years.
This price stability offers an opportunity for marketers to highlight value, improve in-store experiences and increase engagement across apps and social media, the study suggests.
How is this market in Mexico?
Mexico’s RTD market is benefiting from the flavor boom and falling prices of agave, driven especially by tequila-based options.
José Luis Hermoso of IWSR comments: “Despite price increases, RTD volume growth in Mexico continues. The category remains robust and is expected to grow due to favorable demographic momentum, expansion in convenience stores and by the investment of multinationals”.
RTD volumes in Mexico will grow 5% annually between 2024 and 2027, but will still represent less than 2% of total alcoholic beverage sales, according to IWSR.
Despite high levels of investment by large companies and evidence that consumers are open to trying the products, hard seltzers simply have not taken off in Mexico, and IWSR forecasts anticipate a steady decline in consumption into the future. 2027.
“Some hard seltzer brands have left the market due to low sales. This subcategory remains largely misunderstood by the vast majority of Mexican consumers,” said José Luis Hermoso.
While multi-packs and larger formats are preferred by more than 50% of RTD consumers surveyed in IWSR research.
“These larger formats help reduce the price per liter and are performing better than single-dose formats in the current difficult economic conditions, which have reduced disposable income,” adds Hermoso.
Continue reading: Generation Z seeks indulgent drinks
