Premiumisation in Spirits: Aspiration and Adversity

Delivery

This report comes in PPT.

Key findings

Premiumisation is under pressure 

Even as inflation eases (for now) in much of the world, cost of living pressures continue to drag on spirits consumption. Premiumisation is slowing as the prolonged strain on household finances forces consumers to cut back on purchases, or even consider trading down. The relative affordability of retail prices means further moves towards at-home socialising will be a common story.

Building flexibility into strategies is ever more important

The developments underway represent a change of pace rather than a change of direction. Still, an adaptable approach to prices, products and outreach efforts will help target short-term affordability needs, although discounting should be used sparingly to avoid undermining positioning. Global economic uncertainty and geopolitical tensions risk further disruption to supply chains and spending habits in the years ahead; flexibility needs to be kept in mind.

“Less but better” is still the foundation of spirits demand

Premiumisation is rooted in several embedded trends: the focus on quality over quantity linked to wellbeing concerns, aspirational consumption, and demand for authenticity and heritage. Those themes will outlast temporary disturbances. Concentrating on qualities known to enhance value, and responding effectively to developments and nuances between categories, will help businesses navigate uncertain times.

The changing nature of aspiration

The meaning of “premium” is evolving as priorities are revised in an interconnected and unsettled world, and demographic shifts see Gen Z and Millennials gain influence. Ostentatious displays are out, and authentic messaging, environmental and social responsibility, and digital literacy are in. Socialising and creating memories are still considered vital, and imaginative experiences can tap into that demand to leave a lasting impression.