There’s no denying the popularity surrounding the ready-to-drink (RTD) beverage market. The U.S. RTD market grew 1.3% in 2022, according to Statista, reaching a value of $4.8 billion.
IWSR also expects RTDs to make incremental volume gains from 2022 to 2027, expanding at a compound annual growth rate (CAGR) of 1%. This is largely due to consumers shifting from malt-based, seltzer-like RTDs to spirits-based products.
With every brand seemingly entering into the RTD space, it takes more creativity and innovation than ever in order to stand out. Although smaller than many competitors, this NY-based independent brand is coming up with its own unique techniques to attract buyers and increase sales.
Entering the Crowded RTD Market
Founded by Ruby Honerkamp, Talkhouse Encore spirits-based canned seltzers are quickly making their way through the crowd in NY. They’re currently available in six fruit-forward flavors: Orange Tequila Soda, Cranberry Vodka Soda, Grapefruit Tequila Soda, Lime Vodka Soda, Hampton Mule and the new Vodka Soda Iced Tea & Lemonade.
To stand out in the category, Ruby leverages the brand’s story and connection to Stephen Talkhouse, the iconic Long Island music venue. They lean into the quality and taste of the liquid and their existing relationships in the industry to help with their expansion plans and increased distribution. To date, sales have increased by over 70% YOY. Currently only available in NY, they plan to move into territories within the Tri-State area before expanding nationally.
“I grew up in Stephen Talkhouse, so it’s a special place for me because of its old rock-and-roll institution that’s been around for many decades, as well as the values that are instilled in it,” says Honerkamp. “When we were closed during the pandemic, we were thinking of ways for customers to bring that summer experience home with them.”
While Honerkamp knew the RTD category was taking off, she also noticed that there were a lot of seltzers that were highly carbonated and had little flavor. She wanted to change that.
“I wanted our drinks to focus on flavor, and we keep that at the top of everything we do,” Honerkamp notes. “We wanted to make a really good portfolio of beverages that people can enjoy and drink often.”
The Challenges of Being a Small Business
Honerkamp explains that the biggest challenge in creating Talkhouse Encore seltzers has been being a small brand in a sea of large corporation-backed RTDs.
“When you’re a small brand, you don’t have the name recognition or trust in buyers,” she says. “We don’t have the resources that other brands do, so we come out of the gate fresh-eyed with a lot of rejection.”
But that doesn’t stop Honerkamp and her team. By marketing with liquid to lips and getting people to try their spirits-based seltzers, they’re able to sell their product and get it onto liquor store shelves in NY.
“Just knowing the category in general is extremely saturated, it’s hard to convince people that our drinks are good,” she says. “But once we get them to try our brand, it helps continue the conversation.”
Another challenge that Honerkamp has come up against is the fact that they can’t produce as much volume as the larger brands can. “Being a small business means our costs are different and finding vendors is different. Volume impacts the cost of goods. And a lot of these larger brands have a celebrity associated with them, but all we can do is lean into our flavor and authentic story. Those are two things that most brands don’t have,” she notes.
Premiumization Leading the Industry
Aside from marketing Talkhouse Encore’s spirits-based seltzers by encouraging liquid to lips, Honerkamp notes that the brand has also been successful because of their premium spirits mixed into their beverages instead of malt.
“The biggest thing consumers are looking for in general is premiumization. I’ve seen that trending throughout the industry,” she says. “People don’t want cheap drinks. They want quality beverages that they can enjoy.”
Another big trend in the beverage alcohol industry is the preference towards better-for-you drinks. Talkhouse Encore’s seltzers fit into this category as well, since they don’t use any added sugar.
“We do tastings every weekend, and what I’ve seen is that consumers lean toward clean drinks,” Honerkamp notes. “Even when you just drink a glass of wine, you don’t realize how much sugar is in it. The more consumers know what’s in their drinks, the more they’ll feel confident about what they put in their body.”
Honerkamp believes this is the future of RTDs.
“People want to enjoy what they’re drinking, but they’re definitely more health conscious than they have been before,” she says. “It will continue to be a narrative in this space, but you also need people to keep buying your drink, otherwise you won’t be successful. You need to strike a balance with that, which is why I’m very proud of how we fit in as a brand and are able to hit all of these touchpoints.”
