Diageo is to double down on the alcoholic ready-to-drink segment amid sluggish sales of standalone spirits.
With softness in the broader spirits category – particularly in the US – continuing to drag on sales at the London-listed drinks giant, Diageo said it would look to use ready-to-drink and ready-to-serve cocktails as both a recruitment and retainment tool for its brands.
“We have to continue thinking about RTDs and RTS in a positive way, from an angle of what it can bring in terms of drinkers coming in through RTDs and into spirits,” Diageo interim CEO Nik Jhangiani told investors on Thursday (6 November).
Pre-batched spirits cocktails could also help Diageo meet evolving consumer need states, including a desire to consume less alcohol and fewer calories, Jhangiani said.
“Clearly, there are some shorter-term pressures, particularly in the US, in terms of downtrading, but we’ve got to step back and look at how we are thinking about a broader range of growth opportunities,” he added.
Smirnoff Ice play
Earlier this year, Diageo outlined plans to revive its Smirnoff Ice RTD in the UK, following years of sales declines.
Smirnoff Ice had become a “sleeping giant” in the supplier’s portfolio, Nin Taank, RTD category manager for Diageo GB, told The Grocer in March.
Sales of Smirnoff Ice slid by 11.7% in the year to February 2025 [NIQ], but the brand would be revitalised with a £1.9m investment in the UK this year, he revealed.
Diageo’s Gordon’s brand, meanwhile, recently lost its title as the UK’s best-selling RTD, after being leapfrogged by Au Vodka according to NIQ data [NIQ 12 we 4 October 2025].
Alongside a renewed focus on RTDs, Diageo was also looking to sharpen its focus on recruiting new drinkers, Jhangiani said. The supplier had previously devoted too much attention to persuading existing drinkers to trade up to more premium brands, he admitted.
“I think in some ways, we’d forgotten [about recruitment] because we were so focused on premiumisation,” he said. “I don’t think they need to be at odds with each other, because you can recruit and be premiumising at the same time.”
Tequila sales concern
Amid flat net sales growth, a 4.1% dip in spirits sales in the US was flagged as a key area of concern in Diageo’s first quarter trading update.
A slowdown in tequila sales was blamed for the showing, with Diageo management admitting consumers were eschewing some of its pricier tipples including Don Julio.
“Clearly, consumers are trading down,” said Jhangiani. “We’ve also had some strong anecdotal evidence and data points in terms of [consumers] just shifting out of the category and potentially going into RTDs or using tequila as kind of a chaser. So what that means is their rate of purchase is going to be that much lower.
“Competitive pressure has also increased. You’re seeing that much more in terms of both frequency and depth of discounting.”
Nonetheless tequila – alongside scotch whisky – would “continue to be a big opportunity” for Diageo in global markets moving forwards, he insisted.
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