Although it is still in ‘infancy’, the future of the ready-to-drink (RTD) market in Brazil is looking bright, IWSR Drinks Market Analysis said.
Looking at opportunity through innovation and ‘large-scale’ investment, IWSR’s senior research analyst, Luciano Anavi, said: “Still in its infancy in terms of development, the Brazilian RTD market has not yet achieved the same levels of success as countries like Mexico.
“The category has limited participation and relatively low year-on-year growth. However, the future looks brighter, as investment levels and the number of new product launches – mostly brand line extensions – remain high.”
Flavoured alcoholic beverages (FABs), experimentation, premiumisation, ready-to-serve (RTS) products and the wide range of products, were all pointed to by Anavi as areas of opportunity for the category in Brazil.
For starters, RTD cocktails invite innovation, which has kept consumers involved. Moreover, Anavi said FABS “remain the cornerstone of Brazil’s RTD market” and account for around two-thirds of its volumes. Anavi expected this to continue through the lower prices and broad flavours they present.
Recent RTD trends have seen products play with blends, alcohol bases and fruits, along with new takes on classic cocktails, which capitalise on the “flavour boom” in Brazil.
Of this, Anavi said: “The country has a long-standing tradition of flavour consumption across fast-moving consumer goods, which has a noticeable impact on various TBA [total beverage alcohol] categories. As a result, RTDs have become a runway for new and bold flavours and blends.”
The increase in selection is affecting the market too. For example, up until 2022 canned gin and tonics dominated the category in Brazil, especially with new launches. However, successful releases of other canned cocktails such as Jack Daniel’s Coca Cola RTD have shown wider preferences are emerging.
“Vodka and gin are the preferred spirits for RTDs in the cocktails and long drinks subcategory, but whisky is catching up fast,” said Anavi. “The launch of the Jack Daniel’s and Coca-Cola RTD is ushering in a new era of whisky-based cocktails and long drinks in a market long dominated by vodka and gin offerings.”
Anavi also marked high-ABV RTDs and no-and-low options as an “untapped opportunity” for Brazil. In Chile, Jack Daniel’s and Coca-Cola Zero launched with success and Anavi noted that Brazil could follow in its footsteps.
Lastly, while standard priced products make up most of Brazil’s RTD category as flavoured expressions are cheaper, premium products are seeing stronger interest. Anavi explained: “Most innovation is happening in the standard and premium segments, with companies trying to improve their margins with NPD.
“Upscale products are gathering momentum and are set to serve as a platform for substantial experimentation by major players in both the near and medium term.”
Anavi did note, though, that after large volume growth increases for premium RTDS in Brazil (40% in 2021, and 57% in 2022), 2023 saw a slowdown thanks to a tougher economy.
Anavi said: “In the early part of last year, there was a strong emphasis on new product releases primarily within the standard category. Meanwhile, premium options began to experience a decrease in demand, as consumers shifted their attention towards offerings that provided better value.”
In October last year, IWSR slowed its volume growth expectation for RTDs to 12% between between 2022 and 2027 across 10 markets, which included Australia, Brazil, Canada, China, Germany, Japan, Mexico, South Africa, the UK and the US.
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Author: Rupert Hohwieler
