In the legacy of the Covid pandemic, the premium-and-above offering has expanded significantly, and it’s a market trend that many of Australia’s leading beverage producers have heavily invested in.
As economic pressures have persisted, manufacturers have been able to mitigate the general decline in alcohol volumes by building their premium offerings, and yielding sales from drink-less-but-better trends, but new data from the IWSR paints a different picture for the future of premium price points.
The spirits category has been one of the biggest beneficiaries of premiumisation, but market data from the IWSR recorded a drop in momentum for the premium price tier last year. However, while premium spirits sales dropped, sustained growth of the super-premium-and-above price point presents an interesting countertrend.
Typically, premiumisation has been driven by older male drinkers of higher income, but US market data suggests that an emerging group of younger and more gender-balanced consumers are driving demand for super-premium-and-above while other premium price points fall flat.
The IWSR states: “The needs of this emerging group tend to be broader than simply seeking a desirable tasting product wrapped up in aesthetically pleasing packaging. Their education in luxury is more holistic, around the wider positioning of a given brand in society, the experiences and touchpoints it offers, and therefore the broader meaning of their alignment with that brand.”
One example of this cohort’s influence can be seen in the US whiskey market, where the most common consumer profile has evolved, and is now most likely a Millennial female, driving the premium-and-above segment to outgrow standard-and-below price points at three to one.
The IWSR has also identified similar patterns across other spirits categories in the US market, with a similar Millennial middle- and upper-income consumer segment driving the tequila boom, though with a more gender-balanced split.
While premiumisation has for many years allowed manufacturers to counteract reduced consumption, Circana’s Director, Health & Lifestyle, Jarna McLean, suggests that reduced spending is currently an important shopper behaviour to be aware of.
Ahead of the Retail Drinks Innovation Summit next month, McLean gave a preview of retail liquor market and shopper insights to The Shout, also highlighting a change in the premiumisation trend as we know it.
“Everything is around moderation, and those two key trends are really moderation of spend and moderation of consumption, and that’s really what’s been driving performance over the last 12 months,” she stated.
While McLean highlights a decline in spending, she also says: “It’s important to remember that this moderation of spend is not directly linked to trying to save money, it’s really about trying to identify the best value for each shopper, and every shopper has a different value proposition or definition of what’s valuable for them. So, is it the end of premiumisation? No, it’s just changed a little bit.”