Introduction

Consumer wealth in real terms is growing across Europe and the US. Changing preferences are creating the ideal conditions for the growth of premium products such as the desire to self-treat, to enjoy better health and to increase 'connoisseurial knowledge'. In the US, the specialty market for food, drink and personal care was worth US$66.9 billion compared with US$32.2 billion in Europe.

Scope

*Detailed country-by-country analysis and insights into the differences in trading-up behaviors and attitudes by region
*Quantitative data outlining the current and future value of the specialty product market segments across food and drink and personal care
*Quantitative and qualitative data on the key socio-economic factors contributing to premiumization
*Detailed action points offering practical strategies based on the trends and insights analyzed in the report

Highlights

The mass-marketing paradigm is likely to slide into obsolescence as its approach favors over-consumption leading to social health problems. Consumers want a reduced quantity of products with a greater accent on quality. This obvious conflict points to the rise of premium products.

In wealthy, egalitarian societies consumers tend to be less aspirational as many of their needs are met. In such countries consumers tend to focus on the practical and health benefits of a premium product.

Baby Boomer consumers are key targets for premium product marketers as they have rising income from the rising value of property markets and are most likely to appreciate the finer qualities of premium goods.

Reasons to Purchase

*Gain detailed consumer insight into the attitudes driving the consumption of premium-priced products.
*Improve your marketing strategy by targeting the most profitable consumers and understand their purchase motivations.
*Understand the different drivers of premium product purchase by region and how you can best exploit the differences from one country to another.

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
METHODOLOGY 1
TABLE OF CONTENTS 2
Datamonitor View 1 2
CATALYST 1 2
SUMMARY 1 2
METHODOLOGY 1 2
TABLE OF CONTENTS 2 2
Analysis 4 2
Rising consumer affluence drives premiumization 4 2
Growth in sales of premium products continues but is moving towards maturity 4 2
Rising incomes are allowing people to buy better quality products 6 2
Income complexity has seen consumers alter their behavior to afford better quality goods 8 2
The impact of socio-economic factors means that premium product growth is not universally high across Europe and the US 10 2
Macro economic factors constrain premiumization 10 2
National character affects premium purchases 14 2
Health concerns are a major factor in premium goods consumption 19 2
Consumers are willing to pay more for health benefits 19 2
Cocooning is driving premium consumption in the home 22 2
Consumers are bringing professional quality home 22 2
In many countries homes are partly seen as property investments 24 2
Mature consumers are the key premium target group 25 2
Baby Boomers have huge spending power and are very demanding 25 2
The meaning of 'premium' risks being eroded 27 2
The premium label risks becoming devalued 27 2
Premiumization is a bar that is being constantly raised 28 2
Conclusions 29 2
ACTIONS 30 2
Make quality central to all premium products 30 2
Act on the emerging consumer trends that have potential greatest longevity 33 2
Successfully stride the health/indulgence divide 33 2
Continually innovate to avoid brand erosion of premium brand values 34 2
Think beyond line and brand extensions 34 2
New channels must be explored and leveraged 35 2
Make image a key focus of marketing 36 3
Play to people's changing aspirations 36 3
Target consumers with relevant products 38 3
Conclusions 38 3
APPENDIX 39 3
Definitions 39 3
Methodology 40 3
Further reading 40 3
Ask the analyst 40 3
ANALYSIS 4
Rising consumer affluence drives premiumization 4
Growth in sales of premium products continues but is moving towards maturity 4
Rising incomes are allowing people to buy better quality products 6
French consumers are spending their rising income on experiences not goods 7
Booming economies create significant consumer aspiration 7
The mass marketing concept is sliding into obsolescence 7
Consumers realize that quality is now better than quantity 8
Income complexity has seen consumers alter their behavior to afford better quality goods 8
Consumers are rewarding themselves and living for today 8
The hourglass economy is squeezing the middle market 9
Income is no longer a linear indication of purchase behavior 9
The impact of socio-economic factors means that premium product growth is not universally high across Europe and the US 10
Macro economic factors constrain premiumization 10
Economic stagnation and consumer attitudes are limiting the growth of premium products in Germany 10
Dutch consumers have been shunning premium products due to a slow economy 11
Unemployment acts as a financial and emotional barrier to trading-up 11
Premiumization is slow in egalitarian societies 12
National character affects premium purchases 14
French consumers are justifiably known for liking the better things in life 14
Italian consumers love the good life but are feeling constrained 15
German consumers shy away from premium indulgence and conspicuous consumption 16
Modest consumers in The Netherlands value substance over style 16
Ingrained modesty limits premiumization in Sweden 17
Spanish consumers are becoming more aspirational as the economy booms 18
UK consumers are moving into a post-materialist phase with regards to purchasing 18
US consumers want inspiring, new experiences 18
Health concerns are a major factor in premium goods consumption 19
Consumers are willing to pay more for health benefits 19
Volume driven selling limits long-term profitability and has implications for consumer health 20
More quality, less quantity is the new mantra (with positive health benefits) 20
Moderate consumption of premium spirits can reduce binge-drinking concerns 21
Wine is soaring on the back of fine dining and health perceptions (but not everywhere) 22
Cocooning is driving premium consumption in the home 22
Consumers are bringing professional quality home 22
Entertaining at home is still important for consumers 23
In many countries homes are partly seen as property investments 24
Home-owners' dual attachment to their homes is aiding cocooning 25
Mature consumers are the key premium target group 25
Baby Boomers have huge spending power and are very demanding 25
Mature consumers are now more active and more open to change 26
Seniors consumers are attracted to strong and complex flavors 26
The meaning of 'premium' risks being eroded 27
The premium label risks becoming devalued 27
Premium products exist in a profusion of categories 27
Familiarity and the passing of time erodes the premium proposition 28
Premiumization is a bar that is being constantly raised 28
Conclusions 29
ACTIONS 30
Make quality central to all premium products 30
Quality of ingredients is a must 30
Geographical provenance is a key opportunity 31
Convenience and thorough cleansing is a key opportunity in household products 32
Act on the emerging consumer trends that have potential greatest longevity 33
Successfully stride the health/indulgence divide 33
Continually innovate to avoid brand erosion of premium brand values 34
Think beyond line and brand extensions 34
New channels must be explored and leveraged 35
Make image a key focus of marketing 36
Play to people's changing aspirations 36
Reinforce brand values with quality packaging 37
Target consumers with relevant products 38
Conclusions 38
APPENDIX 39
Definitions 39
Methodology 40
Further reading 40
Ask the analyst 40
List of Tables
Table 1: Specialty products market value (US$ m), US & Europe, 2001-2011 5
Table 2: Specialty food and drinks market value (US$ m), US & Europe, 2001-2011 5
Table 3: Specialty personal care market value (US$ m), US & Europe, 2001-2011 6
Table 4: GDP per capita (US$ m) by country, US & Europe, 2001-2011 6
Table 5: % Unemployment among under 25 population, US & Europe, 2001-2006 12
Table 6: Gini coefficient, US & Europe, 2004 13
Table 7: Behavioralized attitudes to healthy eating and drinking, US & Europe, 2006 19
Table 8: Behavioralized attitudes to organic food and drink buying, US & Europe, 2006 20
Table 9: Behavior attitudes to alcohol consumption, US & Europe, 2006 21
Table 10: Behavioralized attitudes to entertaining at home, US & Europe, 2006 24
Table 11: Changes in behavioralized attitudes to entertaining at home, US & Europe, 2004-2006 24
Table 12: Consumers reasons for disliking selected household chores, Europe and US, 2006 33
Table 13: Definitions of terms 39
List of Figures
Figure 1: Consumers are seeking professional quality in more of their consumption occasions 23
Figure 2: Many Seniors' are a perfect fit for premium products 25
Figure 3: Seniors are open to trying new experiences 26
Figure 4: Shortened product life cycles are demanding more product innovation 28
Figure 6: Quality of ingredients is a must and should be used as a key selling point 31
Figure 6: Single origin products and ingredients are a growing trend 32
Figure 7: Straddling the health/indulgence divide is a key opportunity in all consumer markets 34
Figure 8: Many different approaches are available for brand extensions 35
Figure 9: Branded distribution has the potential to preserve premium brand values 36
Figure 10: Incorporating consumer-driven content is a key opportunity 37
Figure 11: Godiva's diverse ranges are defined by their distinctive packaging 38