The document discusses the continued growth of the premium market segment globally. While consumers have become more cost-conscious, they still are willing to spend more on premium products that provide an emotional benefit rather than just rational attributes like quality ingredients. Smaller companies have accounted for nearly half the recent growth in premium products by offering authentic, artisanal options that align with consumers' desired self-image. To remain competitive, premium brands must focus on conveying their brand story and offering unique experiences that appeal to customers' emotional needs rather than just touting functional benefits.

1. GET BRANDING
SMART
The continued allure
of premium

2. GET CONSUMER SMART
The continued allure of premium
In recent years the premium segment has been surging globally, with sales of premium
products outperforming total category sales in the majority of markets1
. This growth is at
odds with the extreme cost-cutting behaviour developed as a result of the 2008 financial
crisis. We are all now professional shoppers adept at value seeking and trading down but
we also continue to trade up and spend big when we feel it matters. Spending on
premium is at a premium, what’s the allure and the opportunity?
Many major brands are well aware of the opportunity and have explored creating
premium offerings but nearly half of the recent growth in the premium category has come
from smaller companies1
- reflecting the growing importance of authentic, artisan and
unique characteristics for a premium product. Between 2011 and 2016 in the US, about $22
billion in the FMCG industry sales shifted from large to smaller companies.2
The
Ehrenberg-Bass institute believes that big FMCG brands have missed out in “…exploiting
opportunities for ‘premiumisation’ in developed markets – cases such as the rise of craft
beers and premium hamburgers have left some established brands looking sluggish”. So
how can brands replicate the winning formula?
Rational vs. emotional premium brand attributes
Emotion is key. Consumers tend to justify their premium purchases with rational factors -
54% of consumers globally say a product is premium if “it is made with high quality
materials or ingredients”; 46% - if they think “it offers superior function or performance”.
Interestingly, only 31% thought a product being expensive made it premium13
. But these
are actually hygiene factors in the eyes of today’s professional shopper, it’s really all about
meeting our emotional needs. Emotion plays an important role in building a premium
product image. In most categories messaging focused purely on functionality won’t be
enough to command a price premium. One of the ways to build that all important
emotional connection is to offer what the consumer deems a worthwhile experience.
The value placed upon experiences is something that has risen with the emergence of
social media and the ability to document, share and commoditise experiences. People
today use their experiences to help build their personal brands and identity. 59% of
respondents in a global survey agree that they felt compelled “to be just that bit different
from others in a way to express themselves”4
. With such importance placed on standing
out, consumers may be willing to spend a little more on brands that tell a compelling story
that is compatible with their own desired self-image and values.
1
Nielsen Global Premiumization Report, December 2016
2
BCG, How big consumer companies can fight back, 2017
3
Nielsen Global Premiumization Report, December 2016
4
Foresight Factory Research – Global, August 2017

3. GET CONSUMER SMART
The continued allure of premium
One brand that has clearly understood the need to appeal to our emotional needs and
personal brand to enhance its premium perception is 5 Gum; the brand’s most recent
campaign, created with Energy BBDO, aims to encourage its target of teens and young
adults to live life to the fullest, by telling the stories and the regrets of older generations.
The moving and inspiring stories enhance the brands premium edge, by associating the
brand with a motivating message that really resonates today.
Building premium perceptions over time
Guinness is a perfect case of a brand that has built its premium perception up over many
years – across all of its communication, Guinness references its heritage, quality
ingredients and superior brewing process. It has also created the ‘Guinness experience’ in
Dublin that allows customers to fully immerse themselves in the Guinness story and feel a
part of it. More importantly, Guinness sets its product apart from any other competitor
every time a customer sees a pint being poured. We are all well acquainted with the
Guinness pouring ritual and the need to wait for the product to settle ritualises every
instance of consumption, creating a unique experience and a sense of anticipation every
single time.
In summary
To remain competitive, premium product brands must continue to focus their efforts on
conveying their brand story and offering an experience that goes above and beyond -
whether it’s a service brand offering an enhanced customer experience, or an FMCG
product boasting innovative packaging or a new flavour. While the quality and
craftsmanship of the product is increasingly important, it is the emotional needs these
characteristics fulfil that really matters.

4. GET CONSUMER SMART
The continued allure of premium
If you are interested in learning more about the subject of this article, please contact:
Giovanni Palazzo-Corner, Researcher, Palazzo-CornerG@bbdoknows.com.
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