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Megatrend: Premiumisation

October 12th, 2017

‘Premiumisation’ will be a key megatrend through to 2030.  While premiumisation may not seem like anything new, what has changed is the motivation behind consumers’ purchasing decisions.

In the wake of the global financial crisis, with lavish displays of wealth out of fashion, consumers are spending more on products that can make them better: healthier, more unique, more efficient, thriftier. This is driving demand for products or services allowing them to demonstrate and achieve this better version of themselves.

The classic drivers of premiumisation, the need to demonstrate success, demand for quality, showing that we have “made it”, still matter. Yet with even high-income consumers feeling increasingly stressed, insecure and older, there is a new opportunity for products offering consumers more time, greater safety and clear health benefits.

The quest for options

At its core, premiumisation is about priorities. With more products available at more price points than ever before, consumers can spend more on the things that matter to them, while cutting back, often significantly, on those that do not. For instance, when consumers spend more on high-end travel experiences, they are funding that expenditure by economising elsewhere, such as by flying low-cost air carriers.

Brands that understand these priorities can capitalise on the difference between commanding a premium and becoming a commodity.

Brands need to know their consumers’ priorities

Freshpet, for example, is tapping into consumers’ willingness to splurge on their pets. In the US retail pet food market, premium priced offerings accounted for 61% of value sales in dog and cat food in 2016. Freshpet, which launched in 2016, accounted for 8% of the premium wet dog food segment in 2016, and the brand’s USP is its perishable, chilled dog food which is merchandised in refrigerated coolers. Despite a substantial price point, Freshpet doubled their retail value sales between 2012-2016.

For more information on how to conduct megatrend analysis for your business and the top 8 megatrends that will have the most impact on your business, download our white paper Megatrend Analysis: Putting the Consumer at the Heart of Business.

 

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