The Food & Drink Innovation Network

Premiumisation is changing. No longer does it simply refer to luxury goods and high-end, rich food that is only bought on special occasions. Increasingly, premiumisation is referring to a wide and diverse range of issues within the food industry.

Indeed, the high watermark of traditional premiumisation may have already been and gone. Chris Grantham, consulting partner at Your Future Ltd, has suggested that historically, premiumisation simply as luxury goods probably “came to a head a year or two ago”, when the likes of Tesco Finest and Gu chocolate puddings were making their big entry into the market.

In his view, premiumisation over the past five years or so built up to an “indulgent style”, with products scrambling to keep their price premium and “everyday” items being given a premium make-over.

However, in recent times, the term “premiumisation” has come to stand for a range of new and old concepts in the food industry. Not least, there is the growing importance of provenance.

While at one time provenance meant little more than brands and products relying on their status to prove their worth, now there is a growing shift towards having some knowledge of the history of an individual product as an important reason for it to be considered a premium item.

Simon Wright, founder of the O&F Consulting, believes that premiumisation had been a “superficial” market until recently. He has been surprised at the speed with which provenance has taken an important grip on the market through environmental concerns. Whereas in the past, people spoke of taste and health benefits being the main reasons for their buying organic produce, in the past 18 months ‘the environment’ has exploded as a top reason among many shoppers for choosing organic, Mr Wright explains.

Mr Wright has also come across this sudden focus on the environment and where food comes from in his work with the Quality Food Awards. He has noticed a distinct change in the type of entries being received over recent times, with far more organic and fair-trade produce being entered. This illustrates quite clearly the shift towards provenance as a new area of growth for premiumisation and his views are backed up by another industry professional, Dan De Gustibus, the owner of artisan baker De Gustibus in London’s Borough Market. Mr De Gustibus points out that provenance is becoming an increasingly important area to consider not just in the food industry, as it can be seen happening in a variety of different sectors.

“In Germany, more people are buying Mercedes and BMWs because they are local, but also because of premiumisation considerations,” he explained. So it seems that people are willing to go local and are making a conscious effort to do their bit for the environment – providing they can still get their hands on premium quality goods. “Premiumisation is increasing and luxury goods are now more commonly accepted,” Mr De Gustibus explained. He added that premiumisation, from the industry’s point of view, is “commonsense” today, because it is about being the best you can be.

Mr Grantham agrees: “Genuinely healthy indulgence is what premiumisation is about today.” History of a product and knowledge about it are becoming important growth areas of premiumisation, but the traditional importance of the luxurious and indulgent aspects of premiumisation clearly still remains.

And as for the future? It seems to Mr Grantham that we will head further towards a knowledge-based premiumisation, as biometrics could be used in stores to help people decide exactly what type of products they should be buying to keep them healthy.