Anheuser-Busch signs distribution agreement for Canteen Spirits RTD cocktails

Dive Brief:

• Ready-to-drink cocktail company Canteen Spirits signed a distribution deal with Anheuser-Busch and received an undisclosed investment from its parent company AB InBev’s investment and innovation arm ZX Ventures. Canteen Spirits will join Anheuser-Busch’s Beyond Beer portfolio, which launched in 2018 to capitalize on the growing seltzer, wine, spirits and malt-based beverages segment.
• Canteen Spirits makes a vodka-based cocktail called Canteen with seven flavors, and a tequila-based drink called Cantina that has three flavors. The beverages have low carbs and ABVs, and are made with natural flavors and no sugar. They are currently sold nationwide.
• Premium beverages and ready-to-drink cocktails have grown during the pandemic as consumers increased their at-home drinking. Demand for low alcohol beverages, increasing health consciousness and preference for premiumization and convenience are driving market growth.

Dive Insight:

The RTD cocktail segment is exploding in growth as consumers look for interesting new flavors and combinations to mix up their cocktail consumption. Consumers show strong demand for RTD beverages, according to 2019 Nielsen research, with 55.2% of consumers enjoying the ease pre-mixed beverages offer.

ZX Ventures’ current portfolio includes a wide variety of alcoholic beverages. Adding vodka-based and tequila-based RTD cocktails to the roster will help Anheuser-Busch increase its market position and reach as consumers switch up what they’re sipping on at home. As RTD cocktails gain momentum, options are growing and consumers are eager to try them all. Two-thirds said “assorted flavors” were their top pick in the category, according to Nielsen’s 2019 research. 

At-home alcohol consumption increased during the pandemic, according to a 2020 Economic Briefing from the Distilled Spirits Council of the United States, but convenience still reigns supreme when it comes to the types of beverages that consumers are placing in their carts.

The low-carb and no-sugar attributes of Canteen Spirits’ RTD beverages also appeal to the growing segment of consumers who are adopting a more health-conscious approach to their diets and opting for clean-label products.

Tie-ups with legacy beverage manufacturers and distributors offer smaller brands a major boost in increasingly crowded segments, while helping legacy brands keep their offerings fresh and innovative. For a bigger company, inking a distribution deal or acquiring a beverage startup offers an expedited route into a trendy segment that could come with fewer costs and development time compared to building a new beverage in-house. 

Meanwhile, distribution deals like the one between Canteen Spirits and Anheuser-Busch can expedite market entry and give the smaller brand stronger marketing and branding support. Product differentiation is a key ingredient for RTD beverage brands’ success as more players launch competing products. 

Anheuser-Busch has already seen the merits of this approach. In 2019, it acquired The Fat Jewish’s Babe Wine, which offers canned rosé, pinot grigio and red wine varieties, through ZX Ventures.

Other alcoholic beverage companies are taking similar approaches. Earlier this year, Molson Coors Beverage signed a deal with Casa Kosmos Beverage Group to distribute its 100% blue agave RTD tequila beverage called Superbird. It also partnered with Coca-Cola to manufacture and distribute Topo Chico Hard Seltzer in the United States. Last year, Beam Suntory acquired On The Rocks, a premium RTD cocktail brand.

Still other companies are designing their own RTD cocktail brands. PepsiCo’s recently launched Neon Zebra line of nonalcoholic cocktail mixers was developed in-house and marketed toward younger consumers. This clean label line of mixers also plays into consumers’ preference for convenient at-home drinking options.