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Future of RTDs and zero-alcohol beverages: Innovation & experience
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Saturday, 25 October, 2025, 15 : 00 PM [IST]
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A Saranya
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Ready-to-drink (RTD) and zero/low-alcohol beverages have rapidly shifted from niche innovations to essential categories within the global alcohol market. Their meteoric rise reflects deeper changes in consumer behaviour, particularly among Millennials and Gen Z. These consumers are prioritising health, convenience, and experience—driving brands to rethink not just product innovation, but how and where these beverages are consumed.
RTDs have emerged as a fourth major category alongside beer, wine, and spirits. In US 17% of consumers now choose RTDs in on-premise settings like bars and restaurants, with 35% of bartenders reporting increased RTD sales in the past year. The category is driven by demand for convenient, flavourful, and premium experiences. Spirit-based RTDs in particular are leading growth, contributing 40% more to total RTD sales than the previous year.
Consumers are also increasingly cross-shopping across all alcohol categories, with 14% of alcohol-buying households purchasing beer, wine, spirits, and RTDs. This group accounts for 29% of total alcohol volume, highlighting the growing appeal of RTDs to a broad and engaged audience.
In parallel, zero-alcohol beverages are booming. In Australia, their adoption has more than doubled between August 2020 and January 2025, driven by increased interest in moderation, wellness, and responsible drinking. While non-alcoholic beer remains the most popular option, wine, spirits, and cider are rapidly gaining traction. Safety concerns—especially regarding drink driving—are replacing curiosity as the primary reason for zero-alcohol purchases, particularly among consumers under 40 and over 65.
These trends underscore a broader shift in alcohol consumption, where taste, health-consciousness, and cultural relevance are just as important as alcohol content.
As the RTD and zero-alcohol market matures, brands must move beyond product-centric strategies and focus on winning the "Third Space"—the social environments outside of home and work where people gather. Traditional bars and pubs are no longer the only venues for beverage consumption. Emerging social spaces such as rooftop terraces, nightclubs with wellness themes, arcade bars, board game cafes, microbreweries, and repurposed warehouses are becoming new cultural hubs.
1. Beyond Traditional Venues
Consumers are forming communities around experiential venues that reflect their lifestyles and identities. These non-traditional spaces offer opportunities for brands to integrate authentically and become part of the culture, rather than just suppliers of a product.
Successful brands are embedding themselves in these environments through brand activations, partnerships, and thematic integration, aligning with cultural trends such as fitness, gaming, indie music, and the arts.
2. Experiential Marketing & Pop-Up Culture
RTD and zero-alcohol brands are increasingly leveraging pop-up events and experiential marketing to foster deeper connections with consumers. These short-term activations—such as art gallery shows, streetwear drops, and food festivals—create immersive experiences that resonate with target audiences.
Localised engagement through these events allows brands to:
- Generate buzz and exclusivity
- Test new markets
- Create memorable, shareable moments tied to consumption
- Reinforce a sense of community around the brand
By positioning themselves as lifestyle brands rather than just beverages, RTD companies are tapping into the emotional and cultural drivers of consumer loyalty.
3. Innovation Beyond Product
Innovation in this category must extend beyond flavour profiles or calorie counts. While health-conscious ingredients (CBD, adaptogens, no/low sugar) remain important, the full consumption experience must also be considered.
Leading RTD brands act as experience architects, creating moments that merge hospitality, entertainment, and wellness. This includes:
- Customisable packaging
- Sustainability in design
- Elevated presentation
- Context-aware marketing (e.g., sports events, late-night socialising, sober curious meetups)
This holistic approach requires brands to consider how their products look, feel, and function in social settings, both physical and digital.
4. Embracing Disruption and Reinvention
The pace of change in consumer preferences demands that RTD brands continuously evaluate and evolve their strategies. Those willing to challenge traditional assumptions and disrupt category norms will stay ahead of the curve.
This includes:
- Expanding into new alcohol alternatives, such as agave-based spirits (reflecting the growing popularity of tequila)
- Innovating with low-carb and light lager styles
- Exploring crossover between wellness and indulgence (e.g., beverages that offer both relaxation and flavour)
The most successful brands understand that standing still in this market is not an option—they must be agile, proactive, and forward-thinking.
The zero-alcohol category is no longer an afterthought—it’s a major growth driver, especially in countries like Australia where health consciousness is reshaping consumption habits.
Key insights driving this trend:
- A shift from curiosity to necessity, with safety (e.g., avoiding drink-driving) as a leading motivator
- A strong preference for products that taste and feel like traditional alcohol, emphasising premium ingredients and craft-like execution
- Increased availability across retail channels, from liquor stores to major grocery chains (e.g., Coles, Woolworths, IGA)
Craft-style zero-alcohol brands—especially in beer—are capturing market share by leaning into localism and authenticity. This reflects a larger trend toward independent, small-batch producers offering credible alternatives to big-name alcohol brands.
To succeed in the zero-alcohol space, brands must invest in quality and experience, delivering beverages that satisfy both lifestyle and taste expectations.
RTDs and zero-alcohol beverages are no longer defined solely by their content—they are vehicles for cultural expression, health-conscious living, and social connection. The brands that will thrive are those that transcend traditional alcohol marketing and design immersive, meaningful experiences around their products.
By owning the "Third Space," embracing new venues, investing in experiential storytelling, and staying at the forefront of wellness and innovation, RTD and zero-alcohol brands can ensure long-term relevance and growth in a rapidly evolving market.
(The author is assistant professor, Department of Foods and Nutrition (PG), Vellalar College for Women, Erode)
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