Early results from IWSR’s Consumer Price Sensitivity Barometer suggest that certain categories are retaining premiumisation better than others as inflation bites.
The Consumer Price Sensitivity Barometer tracks ‘multi-wave’ categories across 17 different markets around the world, recording consumer attitudes and responses to price fluctuations.
IWSR stated that ‘in response to constrained incomes, consumers are more selective about which brands and categories they spend their disposable income on, while trying to save money on more quotidian beverage categories.’
The report from the drinks market analysts found that premium brown spirits, such as whisky and Cognac, alongside on-trend categories including Tequila and Champagne, were more likely to attract premium purchases. On the other hand, the analysis also found that drinkers of still wine, RTDs and beer were less likely to upgrade their purchases.
The analysts acknowledged that in some cases, this increase in spend will be involuntary, as favoured brands or staples increased their prices in response to inflation.
In general though, drinks categories are proving resilient to the pressures of inflation, with the most positive global markets (China, India and Brazil) showing increases in nearly every category. And even in the most pessimistic markets (such as Germany and the UK), roughly 30 per cent of drinks categories measured were showing ‘net increases in recalled spend’.
However, IWSR did stress that ‘it is also important to note that, in an inflationary environment, those saying they are spending the same or less per unit in a product category are in effect downtrading.’
The report also found that about half of all adult drinkers in the 17 markets surveyed agreed that they were “more interested in moderating my alcohol consumption generally”, with only 20 per cent saying that they disagreed.
‘There is also widespread evidence of more careful shopping behaviours – switching retailers to get better prices, and waiting for favourite brands to be on promotion before buying,’ IWSR stated.
The analysts concluded that ‘premiumisation trend in beverage alcohol has not been extinguished by economic headwinds – at least not yet. However it is also clear that the strains on household finances are becoming apparent to many consumers, either because of transnational factors such as energy costs, or local economic factors.’