Shoppers around the world are making more room in their budgets for the finer things in life – not in the sense of designer handbags or diamonds but upgrades in everyday consumables.
31% of global respondents say they consider a product to be premium because it’s expensive — a warning to companies who push up prices without providing a very clear value proposition to support the change.
Nielsen‘s latest global report on “Premium Potential” takes a look at growth of different categories based on consumer input around the world and how well do premium products will perform. For example, almond milk versus regular milk.
Unsurprisingly, respondents in Southeast Asia, Latin America and Africa/Middle East are willing to spend more money on better electronics and clothing/shoes, 37% & 36% respectively.
30% of global respondents say they’ll consider paying more for dairy products or better meat or seafood.
More than a quarter of global respondents say they’ll consider spending a few more dollars for premium hair-care (27%), body-care (26%) and oral-care (26%) products.
The premium segment accounts for roughly 23% of sales in the personal category in Southeast Asia.
In Southeast Asia, premium products accounted for 55% of face moisturizer sales, 39% of face cleanser sales and 36% of toothpaste sales, 31% of shampoo sales.
Vitamins were among the top five categories in the region, which should be encouraging to companies like Blackmores that have gone online to widen its customer reach with a shop-in-shop on Lazada.
Although “premium products” seem to be more attractive, it’s still important to note that customers won’t give up their dollars so easily.
“Many are looking for everyday items that perform better or fulfill their emotional needs or social aspirations at a price that doesn’t break the bank,” said Liana Lubel, senior vice president, Nielsen Innovation Practice.
It’s important for brands in Southeast Asia to understand that the growth of premium goods will open up opportunities for distribution and product variation within the scope of fast moving goods. These premium brands are able to bring new consumers into the category and reengage lapsed consumers.
Read Nielsen’s original research on premium goods here.