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Aarkstore Enterprise – Premiumization Strategies in Food and Drinks

  • Issued By: Aarkstore Enterprise
  • City / State: Navi Mumbai
  • Phone: +919272852585
  • Company Website: www.aarkstore.com
  • Submitted: October 27, 2010 4:27 pm


Navi Mumbai, October 27, 2010:

Premiumization Strategies in Food and Drinks: Fighting product commoditization through added value product positioning

The premiumization trend has been identified as starting in the 1970s in alcoholic drinks. It moved first into food and drinks that were associated with treating / indulgence and gifts, such as boxed chocolates. Throughout the latter part of the 1980s, the 1990s and into the 21st century, premiumization has continued apace, developing both horizontally, in terms of the number of categories in which it can be observed, and vertically, in terms of the tiers of premiumization that have been created.

It has been an appealing strategy for manufacturers, offering the possibility of avoiding discounting wars and building better profit margins. However recently it has become increasingly hard for manufacturers to carve out distinctive premium positionings as the markets have become more crowded, and many, but not all, premium products have been affected by the economic downturn.

This report identifies recent and current successful premiumization strategies and considers the impact that the economic downturn has had on the premium sectors of the food and drinks industry. It demonstrates how premiumization can be achieved and defended against the threats it also describes. It identifies the essential elements of success in premiumization and also looks more broadly to emerging consumer trends to consider where the new post-recession forms of premium may come from.

Key features of this report

• An examination of the factors that have enabled premiumization to grow in developed markets and a consideration of how far these will also hold true for developing markets.
• An analysis of the impact thus far of the recession on premium brands in developed markets and the post-recession prognosis.
• An analysis of premiumization in a mature market; the development of tiers or levels of premium, what happens to premium brands when the whole category shifts premium-ward;
• The main premiumization strategies employed – product based (including health, ingredients etc), distribution, packaging, production-based, with examples from around the globe.
• A model of consumer motivations. Why do people pay more for premium? Identification of intrinsic product-related motives and status-related motives. An exploration of the evolution of each; contrasting the motives of mature developed markets and the developing economies.
• An analysis of the main threats to maintaining a premium position and an identification of the tools and approaches that can make a strategy most defensible.
• Emerging consumer trends and the way in which these could be harnessed and applied in developing new premiumization strategies
• Case studies exploring the different routes manufacturers have successfully taken to carve out a premium position, based on ingredients or packaging, distribution, exclusivity etc.

Key benefits from reading this report

• Understand what it is that motivates consumers to pay a higher price and purchase a premium product and tailor your communication and marketing strategy to those motivations.
• Importantly, learn which are the key emerging consumer trends increasingly being identified as influencing the way consumers now think and shop. Affected by these, the ‘new’ premiumization will look very different from that prior to the recession. Consider the application of this for your own portfolio.
• Benefit from numerous examples of new premium products and the ways in which they meet the consumer motivations described. In particular understand how motivations and the cues, such as packaging and descriptors, vary geographically and by product category, thus enabling you to tailor your communication appropriately in different markets.
• Identify the key threats to maintaining a premium positioning and how to develop a strategy that is most defensive to these threats
• Benefit from case studies which demonstrate how companies of different sizes, in different categories and in different geographies have used a variety of strategies to build sustainable premium brands. Strategies include those based on product specification, specific ingredients, distribution, exclusivity, scarcity, concerned consumerism and packaging.

Key findings of this report

• Women are the driving force behind premiumization as they increasingly not only do the shopping but earn more of the money with which they shop. This, coupled with rising disposable income leads to an increasing comfort with, and desire to ‘trade up’ beyond products that would have previously been purchased.

• The first ‘rule’ of successful premiumization is that at least some degree of product superiority exists. However simply offering ‘more of’ or ‘better’ is not a very defensible strategy, being easily copied by private label or leapfrogged by another product. More sophisticated and individualized approaches are increasingly being offered, using a mix of product, distribution, brand positioning, and relationship strategies.

• The main approach used to establish premium credentials is product specification, and as noted above, these have become increasingly complex. Health claims, particularly ‘clean’ products (containing no…bad ingredients), high end, natural or exclusive ingredients (particularly super fruits) are increasingly evident. In production, both new and sophisticated techniques offering consumer and/or environmental benefits or, conversely, traditional or ‘handmade’ options all feature.

• Consumers motivations for buying premium brands can be divided into intrinsic product or status related reasons. The intrinsic product can be worth more by being experientially (taste, texture etc) or emotionally (treat, reward) pleasing. In western economies status-related motivations have moved on from being dominated by conspicuous consumption of the most expensive or luxurious. Whilst those motivations are still important, and indeed dominate in developing markets, connoisseurship, and exclusivity based on scarcity have become increasingly important.

• Post-recession, new consumer trends point to the increasing importance of provenance in premiumization, also of being local and trustworthy. Concerned consumerism means strategies which enable consumers to be display altruism and environmental concern will flourish. Scarcity or exclusivity is a key driver of premiumization which can be realised through distribution or production techniques as demonstrated by the success of members clubs with their customised high-end products and personal delivery.

Key questions answered by this report

• How has premiumization developed in mature consumer markets to date?
• What are the differences and similarities between developed markets and the developing countries in terms of premiumization ?
• What impact is the recession likely to have on premiumization in the next few years?
• What are the strategies that manufacturers use to support a premium positioning?
• Are all premiumization strategies based on intrinsic product superiority? What is the role of other aspects of the marketing mix such as distribution, packaging and advertising?
• What are the main threats facing a manufacturer as he tries to maintain a premium positioning for his brand?
• What tactics provide the best defence against an erosion of premium positioning?
• Why do consumers pay more than they have to and buy a premium brand? What motivates them? Have those motivations changed over time?
• What cues do premium products use to indicate to consumers that they are premium and worthy of their higher price point? How do these vary by category and geography?
• What broader consumer trends can we identify that can be adopted profitably by manufacturers to create premiumization?

For more information, please contact :


Contact : Minu
Aarkstore Enterprise
Tel : +912227453309
Mobile No: +919272852585
Email : contact@aarkstore.com

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Information about this PR

  • PR Submitted by: aarkstores
  • Member Since: October 27, 2010