Diageo buys RTD vodka cocktail brand Loyal 9

Source: fooddive.com

Dive Brief:

  • Diageo has acquired vodka-based ready-to-drink cocktail brand Loyal 9 from Sons of Liberty Spirits Co., according to a press release. The financial terms of the deal were not disclosed.
  • The flavored cocktails are 9% ABV, gluten free, and made with 100% real fruit. Flavors include four lemonade varieties, Cranberry Lime and Apple Cider. 
  • According to data cited by Diageo, retail sales of RTD beverages totaled $7.8 billion in 2019, and grew 20% between 2016 and 2019, making it the fastest-growing alcohol category. The beverage company recently announced an $80 million investment to ramp up production of of its RTD offers, including Smirnoff hard seltzers and cocktails from Crown Royal and Ketel One Botanicals.

Dive Insight:

Consumers are spending more time drinking at home due to the pandemic, according to a 2020 Economic Briefing from the Distilled Spirits Council of the United States (DISCUS), but they still are showing an interest in conveniencePre-mixed drinks offer consumers a great way to try new flavor combinations from the comfort of their homes without needing to consult a mixologist, or purchase the list of ingredients that many cocktails require.

In a statement, Diageo North America President Debra Crew said the Loyal 9 acquisition was part of the company’s strategy to “build and diversify our RTD offerings across price points and consumer segments.” Loyal 9 falls into the premium category while also offering a unique twist through its vodka base. It marks Diageo’s second RTD acquisition within the past month. In March, the beverage giant scooped up Far West Spirits LLC, which owns premium hard seltzer brand Lone River Ranch Water.

Loyal 9 may catch consumers’ eye as a way to change up their options and try something different. Its 100% real fruit and limited ingredients may provide the perfect compromise for consumers who are health-conscious but still want to enjoy a cocktail.

Several other drink makers are also active in the RTD cocktail space. This includes Molson Coors Beverage, which recently partnered with Casa Kosmos Beverage Group to distribute its 100% blue agave tequila-based cocktail, Superbird. In 2020, Beam Suntory purchased RTD cocktail brand On The Rocks and announced ambitions to become the top spirits-based RTD maker in the market. And in 2019, AB InBev purchased The Fat Jewish’s Babe Wine, which offers Rosé, Pinot Grigio and Red wine varieties in a can, as that space sees momentum.

Diageo also faces stiff competition from the growing list of hard seltzer manufacturers that are trying to snag a piece of consumer demand. Some of the biggest players in the RTD segment include White Claw maker Mark Anthony Brands and Boston Beer’s Truly. They are joined by new entrants such as Hornell Brewing Company, which is affiliated with Arizona Beverages; Heineken USA, which debuted Bask IPA-style hard seltzer; AB InBev; and Molson Coors, which recently formed a partnership with Coca-Cola to make, market and distribute Topo Chico Hard Seltzer in the U.S. 

That said, there may be plenty of market share to go around. Consumers seem most interested in exploring different offerings in the RTD segment, including new forms and flavors. This suggests that the more variety there is in the market, the longer consumers will keep their fridges stocked.