Premiumisation: Past, Present and Future

Megatrends

About This Report

Mar 2018

Discussions of premiumisation as a concept are often rooted in perceptions from the late 1990s and early 2000s, when many markets saw a surge in demand for products offering a upgrade in terms of price, quality, and sophistication. However, the global financial crisis and the smartphone revolution permanently altered many of the rules of play for premium strategies. This report examines the historical evolution of premiumisation, in order to chart a course for the next 10 years.

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Premiumisation: Past, Present and Future

The second wave of premiumisation is here

The post-global financial crisis landscape has permanently altered the rules of premiumisation, as consumers seek higher levels of service, personalisation and connection.

Premiumisation or commoditisation

With mid-tier product segments under pressure, more brands face a choice between commoditisation or premiumisation. Premiumisation is as much about value preservation as creation.

Relationships drive premium positioning

The rise of Amazon, Google and Facebook have created new opportunities for driving consumer engagement at the cost of growing commoditisation for brands unable to adapt. Those that will be able to retain their premium perception are those which continue to drive direct consumer engagement.

Nodes drive engagement

Demand for greater personalisation and integration requires massive amounts of data to meet. Every brand must carefully consider which “nodes” of connection can be leveraged, from in-store experience, to user interface, to post-purchase community.

A new age of integration

As a new internet retailing environment creates opportunities for even small start-ups to achieve region-wide or nationwide distribution and product awareness, brands must find new means of differentiation. This will give rise to new forms of vertical integration, from sourcing to manufacturing to retailing, as distribution, logistics and mass marketing become increasingly commoditised.

Introduction

Key findings

Premiumisation Then and Now

Premiumisation : historical context and future development
Long-term global income trends accelerate
Gravitational pull of older consumers will continue to grow
Powerful retailers look to drive out costs everywhere and anywhere
Fragmentation grows as small players find new platforms
More social media means more personalisation, faster innovation
Aggregation and hyper commodification
Amazon makes premium strategy harder, more essential than ever
Premiumisation : where are we now?

Understanding the Second Wave of Premiumisation

Welcome to the second wave of premiumisation
Megabrands’ key advantages are being eroded
Coffee ’ s “ waves ” offer a guide to the evolution of premium
JAB reshapes the coffee world
The fourth wave of coffee and the second wave of premiumisation
From West to East: Japan as a new premium compass point
Kit Kat tells a new story in Japan
Navigating the shift from premium to luxury
From fast casual to chef-driven quick service
Time Out opens a new era for street food in Lisbon
The “ casualisation ” of fine dining and the death of the middle
From Dyson to Roomba: the rise of in-home service
Miele integrates the washing process
Capturing spending streams and protecting what matters
From celebrity-driven to community-driven premium beauty
Glossier takes community-sourced beauty further
Hyper-personal care, product communities, and the search for data
From craft culture to “ reduced harm ” indulgence
Seedlip brings craft, distillation to non-alcoholic drinks
Cocktail and craft culture comes to packaged food and drinks
Steps towards a third wave of premiumisation

Conclusion

Premiumisation : riding the second wave and catching the third