The ready to drink sector is the fastest growing part of the drinks industry and guerrilla tactics are helping one small New Zealand company compete with the industry#;s giants. David Robertson investigates the surprise success of Independent Liquor.

Independent Liquor is a small and aggressive drinks maker from Papakura, Auckland. It is a private company headed by Michael Erceg and it refuses to discuss its operations, sales or profitability. But its success in Australasia can be measured by the honest compliments handed out by rivals that are 10 times its size.

Drinks executives admit off the record that they are surprised by Independent#;s ability to dominate such an important market and Lion Nathan chief executive Gordon Cairns went as far as to say that Independent “leads the market” in a recent presentation to buyers.

Independent Liquor is completely outgunned in terms of resources but it is still ahead of the opposition - how?

Independent started life 15 years ago making wine cooler drinks - a forerunner to the RTD craze. It also made spin off spirit and beer mixes, but when RTDs became popular in the mid 1990s it shifted production and now boasts that it can get a new product to market in just two weeks.

RTDs themselves are usually sweet concoctions of established spirit brands or new mixes - typically a fruit flavour and vodka. They are very popular with the youth market and have been a god-send for drinks companies looking to pull in a new generation of party-going youths who don#;t want to drink beer or straight spirits.

Most of the brands currently available are based on classic spirits like Smirnoff or Jim Beam and in Australia UDV#;s Bundaberg rum. RTDs are dominated around the world by large drinks corporations with the cash and marketing spend to attract the core market.

But Australasia is different. Independent makes a range of mixes that have been created from scratch like the highly successful Cruiser range, KGB and Mustang that are all now market leaders.

“The large corporations have historically been market leaders in everything they do and they seem to be having huge difficulty becoming accustomed to not being in that position,” Erceg told just-drinks.

Perhaps surprisingly Independent does not spend a lot on advertising - it is an innovation driven company that reacts to changing fashions fast in order to keep ahead of its competition. This appears to be the key to its success: it treats the RTD market like the fashion industry.

“Trying to predict the fashion of the day is very difficult but if you are producing the fashion of the day then it is not at all difficult to compete - it is not a risk. Will Versace still be there in five years? Probably.

“The fashion business comes up with a lot of new fashions and that#;s the way to find a successful one. Historically the big drinks companies would do lots of market research and then take a product to market. But what we are doing is determining fashion rather than trying to predict it.”

The strategy appears to be working. Independent has just opened a new bottling plant at Laverton, Melbourne and it appears to have a substantial share of the A$400m a year Australian RTD market - at least according to rivals.

Both Fosters and Lion Nathan have been forced to gear up RTD divisions in order to stay competitive in their domestic market while Guinness UDV and Allied Domecq remain a presence in the Australasian market. But none of them can quite believe that a small Kiwi company is beating them at their own game.

“Perhaps they expect us to disappear and who knows, maybe we will,” says Erceg philosophically.

If Independent does manage to stick around it will have to consider expanding outside its traditional Australasian market. The Australian RTD market is already maturing with consumption at about nine litres a year - just less than the world leader, the UK. But RTD consumption in the US and Canada is just 0.2 and 0.4 litres respectively and any long-term success for Independent will likely come from cracking that market.

Given the success Independent has had and the lack of significant direction from the Australian competition it is perhaps surprising that Independent is not getting lucrative offers to sell its winning strategy. Erceg says he does not receive offers and claims he isn#;t interested anyway. He will instead continue to play the king of fashion in this new sector.

“Just don#;t call me the Christian Dior of the RTD market,” he adds laughing.