Everything is prefaced with ‘super’ at the moment – super skinny, super-sized, super-cool. Super-premium is super-popular – reporting volume and value growth in almost every category globally – but just how super-profitable is it and how is the not-so-super-premium spirits segment faring?
According to latest IWSR figures, almost every spirits category globally and almost every region, volume and value growth for the super-premium quality segment has outperformed the premium.
This doesn’t mean the premium segment should be ignored. William Grant & Sons global marketing manager James O’Connor says: “Globally it is still about twice the size of the super-premium spirits category as a whole by value. This suggests that, in general, more people are placing more value on their spirits choices.”
Pernod Ricard is the undisputed leader of the premium category, according to Yves Schladenhaufen, Pernod Ricard’s innovation & portfolio strategy director. Biased, perhaps, but 75% of his company’s portfolio is premium and above. Its main competitors can only boast 25% less than this, according to Schladenhaufen.
“For us, premium remains critical as it is the most dynamic category of the industry,” Schladenhaufen says. “‘Premiumisation’ [is] a pillar of our business model [and] a long-term approach. It’s a strategy of value creation.” In 2014, premium represented a smaller share of the market than standard brands but 36% of the global turnover versus only 34% for standard brands.
“Obviously, in periods of crisis consumers cut their spending in the premium end, but all data shows that premium and super-premium offerings come back faster and stronger.”
The company is in lockdown ahead of its annual results so Schladenhaufen is tightlipped on brand performance and whether Absolut sales have continued to suffer after poor performance and volume losses in the US.
He did say: “In the long term, the standard segment grew less than 2% yearly, whereas premium spirits posted 3% and super-premium 5%. This is not cannibalisation, it is premiumisation, driven by more consumers from the middle class and more affluent consumers worldwide.”
To achieve this, brands must stick to their values and their positioning, according to Schladenhaufen. “If a brand’s proposition is weak, its positioning is not sustainable. A brand is like a person, you must deliver according to expectations. If you don’t keep your promises, you disappoint and your friends turn away,” he says.
“If you launch a super-premium brand or line extension, you should really ask yourself whether there is something solid in it – a true story, a real quality benefit. Specifically on vodka, we can see some super-premium brands lowering their price, turning to a premium position. This raises the question of the sustainability of their proposition.
“In the gin category, we can see a proliferation of brands with exciting propositions. Only the ones tapping into a real consumer need will be able to maintain their positioning and survive. And this is very often quality, clarity on who is making it and how, and its point of differentiation versus competitors.”