The Rise of RTDs (Ready-to-Drink Cocktails) and What It Means for Alcohol Laws
In recent years, Ready-to-Drink (RTD) cocktails have exploded in popularity, becoming one of the fastest-growing categories in the alcohol industry. Consumers love the convenience, variety, and high-quality flavors of these pre-mixed beverages. However, as RTDs gain traction, they are also raising new legal and regulatory questions that impact producers, retailers, and hospitality businesses. Understanding liquor laws and ensuring compliance is essential for businesses navigating this evolving market, especially in states like Texas, where alcohol regulations can vary significantly. Consulting a liquor attorney is often the best way to stay compliant and avoid costly legal issues.
What Are RTDs and Why Are They So Popular?
RTDs are pre-mixed alcoholic beverages that come in cans or bottles, offering a convenient alternative to traditional cocktails. They can range from simple spirit-and-mixer combinations (e.g., vodka soda) to craft-inspired drinks with premium ingredients. RTDs can be made from spirits, malt beverages, or wine, and what the RTD is made of has a lot to do with where and how it can be sold.
Why Are RTDs Booming?
Convenience: Consumers enjoy the grab-and-go appeal of RTDs.
Health Consciousness: Many RTDs advertise lower calories and natural ingredients.
Premiumization: Brands are offering high-quality, craft-style RTDs with better ingredients and packaging.
Changing Consumer Habits: Younger generations are gravitating
toward RTDs over traditional sprits, beer, and wine offerings.
As demand for RTDs continues to grow, states like Texas and others across the U.S. are evaluating how these beverages should be classified, sold, and taxed.
How Liquor Laws Are Struggling to Keep Up
As RTDs become more popular, lawmakers and regulators are facing challenges in categorizing and controlling them. Here are some key legal issues arising from this trend:
1. Classification and Taxation Challenges
One of the biggest legal debates around RTDs is whether they should be taxed and regulated like spirits, beer, or wine.
Many states classify spirit-based RTDs (e.g., canned margaritas) as the same as traditional distilled spirits, subjecting them to higher taxes and stricter distribution rules.
OthersAn emerging trend is to treat RTDs, even spirits-based RTDs, with lower ABV (alcohol by volume) as beer or wine, which can reduce tax rates and allow for wider retail availability.
Many spirits-based RTD producers are lobbying for tax reforms, arguing that their products should be taxed similarly to beer and wine-based seltzers.
Businesses selling RTDs most likely must ensure compliance with some tax regulations to avoid fines. A liquor attorney can help companies to navigate these tax challenges and stay up to date on evolving liquor laws, particularly in states like Texas, where regulations can differ from national standards.
2. Where Can RTDs Be Sold?
Since RTDs often contain distilled spirits, they face restrictions on where they can be sold.
In some states, spirit-based RTDs can only be sold in liquor stores, while malt-based beverages (such as many hard seltzers) are allowed in grocery stores and gas stations.
This distinction limits spirit-based RTD market growth and frustrates both producers and consumers who want wider availability.
Some states, like Michigan and Nebraska, have changed their liquor laws to allow more flexible sales of spirit-based RTDs.
In Texas, retailers and bars must understand specific licensing requirements to legally sell RTDs. A liquor attorney can help ensure businesses are in compliance with all applicable state and local regulations.
3. Licensing and Distribution Complications
RTDs challenge traditional alcohol distribution models, particularly spirits-based RTDs because they look like and are marketed like wine- and malt-based seltzers but often cannot be sold by the same distributors or in the same retail outlets.
Some states limit who can distribute spirit-based RTDs, making it harder for brands to reach retailers.
Restaurant and bar owners may need additional licenses to sell RTDs for takeout.
States like Florida have updated their liquor laws to allow restaurants to sell RTDs for carryout, but regulations still vary widely.
In Texas, businesses must be especially cautious because the state offers several types of retail permits, each authorizing different activities with respect to beer, wine, and spirits sales for on or off-premise consumption. A liquor attorney can help businesses navigate these regulatory hurdles and maintain compliance with local liquor laws.
4. Law Changes for Low ABV RTDs
Regulators in many states are reviewing whether to allow low ABV RTDs to be sold in traditional beer and seltzer outlets, like convenience stores and grocery stores.
Many RTDs contain between 4% and 12% ABV very similar to beer and malt- and wine-based seltzers.
Some states are considering allowing low ABV spirits-based RTDs to be sold outside of liquor stores.
Some states are also considering allowing low ABV RTDs to be beer distribution rules.
In Texas, different liquor laws may apply depending on the alcohol that the RTD is made from, which will affect where and how it is sold. Businesses must work with a liquor attorney to stay updated on these evolving regulations.
5. Marketing and Labeling Regulations
Like other alcoholic beverages, RTDs must comply with federal and state advertising and labeling laws.
Brands must be careful with health claims (e.g., “low-calorie” or “natural”) to avoid misleading consumers.
Social media advertising is under scrutiny, especially if brands appear to market to underage audiences.
Labeling requirements differ depending on whether the RTD is made from spirits, wine, or malt.
A liquor attorney can help businesses ensure that their RTD branding, advertising, and marketing campaigns are in compliance with state and federal liquor laws. In Texas, where alcohol regulations can be particularly complex, businesses need expert guidance to avoid legal risks.
What This Means for the Alcohol Industry
For Producers:
Know your state’s classification laws—RTDs may be taxed and distributed differently depending on what they are made from.
Advocate for fair regulations—Many brands are pushing for tax and licensing changes.
Ensure compliance—Marketing, labeling, and licensing rules vary widely, so legal guidance is crucial.
For Retailers & Bars:
Check licensing laws before selling RTDs for on-site or off-premise consumption.
Be mindful of advertising restrictions, particularly around promotions and social media marketing.
Train staff on ABV variations, as some RTDs may be stronger than typical beer or wine.
For Consumers:
Expect wider availability as more states update their liquor laws to allow spirits-based RTDs in grocery stores and convenience stores.
Be aware of alcohol content—some RTDs have higher ABVs than wine, beer, or seltzers.
Support brands advocating for change if you want to see RTDs more widely available.
Final Thoughts: The Future of RTDs and Liquor Laws
The RTD market isn’t slowing down, and lawmakers will need to adapt to this growing segment. As more states revise their liquor laws, businesses must stay informed to ensure compliance while maximizing opportunities.
For businesses in Texas and beyond, working with a liquor attorney is crucial to navigating licensing, taxation, and regulatory challenges. If you’re a producer, retailer, or bar owner looking to stay ahead of the curve, consulting a legal expert can help ensure your business complies with the ever-changing world of liquor laws.