Diageo and Pernod Ricard Tap Into US Bottled Cocktails Market

Summary

  • The major liquor corporations, Diageo (LON:) and Pernod Ricard (EPA:), have recently launched bottled cocktails in the American market amidst the ongoing COVID-19 pandemic.
  • The companies are marketing these bottled cocktails that can hold up to 750 millilitres of alcohol, as a suitable replacement of wine at festive parties.
  • The bottled cocktails are being seen as a cost-effective alternative to bar drinks, amidst a rising cost of living.
  • However, concerns exist about the quality and authenticity of these bottled cocktails when compared to those created in a bar setting.
  • Despite these concerns, the ‘ready-to-drink’ alcohol market, where these bottled cocktails fall, is expected to be worth $21.1 billion by 2027 in the US alone.

Diageo and Pernod Ricard have entered the ready-to-drink cocktail market in the United States, leveraging a trend that has grown due to the pandemic.

Bottled Cocktails Introduction

The newly launched bottled cocktails provide a unique alternative to individual canned cocktails, by offering up to 750 millilitres of alcoholic beverage. These companies anticipate their offerings to be popular for festive events, replacing standard table wines.

Consumers have expressed satisfaction with the bottled cocktails, with 22-year old New Yorker, Nylaya Corbin, praising the strength of Diageo’s Espresso Martini which she found superior to other versions she had sampled in bars and restaurants.

Price Conscious Consumers

Consumers, particularly those mindful of their budget, have welcomed the cocktails as a more cost-effective option given the escalating cost of living. For instance, Caroline Zatina from South Carolina did a quick cost comparison and found the $20 cocktails affordable and convenient.

Market Opportunities

Diageo has made clear its intention to dominate the ready-to-drink cocktail market, putting in place holiday-themed marketing strategies and promoting its brand through influencers and events. According to Nikhil Shah, the brand director, a new cocktail will be added to their selection in February.

Predictions suggest that the ready-to-drink alcohol market which includes products like canned cocktails and hard seltzers, could reach a staggering value of $21.1 billion by 2027 in the US alone, a jump from the current $18.2 billion; mostly driven by the growth of more expensive and premium products.

Challenges and Competition

Despite these market predictions, there are challenges to overcome, among them, the lingering perception that bottled cocktails sacrifice quality for quantity. This, coupled with the fast-growing cocktail competition poses significant threats to the companies.

The impact of this shift in consumer preference towards bottled cocktails could impact the forex and trading world, particularly among the assets of the companies involved in alcohol manufacturing and distribution.

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