Diageo’s new CEO Dave Lewis is reframing ready-to-drink (RTD) from a margin liability to an opportunity, but the spirits giant has ground to make up. Diageo launched Smirnoff Ice roughly 26 years ago and, at its peak – largely thanks to a frat boy-led “icing” campaign – commanded more than 25% of the RTD market, according to the group’s latest earnings presentation. Today, Diageo’s RTD share sits below 10%. Still, the growth of spirits-based RTDs has lured Diageo to test some of its best known premium spirits brands in the space, and into the flavored malt beverage category. - Recent launches have focused on Casamigos – one of the fastest growing spirit brands until a few years ago, when premiumization trends pitted Casamigos and similarly-priced Diageo brand, Don Julio, against each other.
- Last week, the group expanded the line to ready-to-serve margaritas.
So far, success has been mixed. - Diageo ranks seventh of top growth contributors in RTDs (across beer, wine and spirits bases) and ranks ninth of the top growth contributors for spirits-based RTD producers, according to NIQ data analyzed by 3 Tier Beverages.
The new focus on RTDs fits into the CEO’s larger plan to undo Diageo’s identity as a premiumization-focused group – the spirits giant has spent years building a portfolio that skews heavily toward the $45-and-above tier. Meanwhile, “new to world” brands (High Noon, BuzzBallz) have been able to make a mark in RTDs faster than slower-moving conglomerates. So can ‘Drastic Dave’ make Diageo a bigger competitor at the convenience shelf? Continue reading the full story with Insider access |
