Top ten trends of the last ten years: 5. Premiumisation

In our sixth installment of the greatest changes in drinks since db was launched in July 2002, we consider the “premiumisation” trend.

The Gran Patron Platinum sells for almost £200 a bottle

Apparently we need to thank – or blame – Pernod Ricard for the buzzword of the last decade: premiumisation.

Used to describe the demand of better and more expensive variants, primarily within spirits, it has proved an overriding trend since db launched.

The development was perhaps most clearly illustrated in the US vodka market, where “superpremium” brands with expensive packaging grew massively until reaching a sales peak in 2007.

In particular, Grey Goose became the biggest ever single brand sale when Bacardi bought it for US$2bn in cash in 2004 from US billionaire Sidney Frank.

A further stand-out example of the premiumisation trend came with Tequila, when the distinctively packaged Patrón brand ballooned from 340,000 cases in 2005 to over 1.7 million in the US by 2009 – an increase of over 500% in just four years.

Again, Bacardi stepped in, buying a stake, albeit a minority one, in Patrón in 2008. It is owned by another US billionaire, John Paul DeJoria.

Premiumisation seemed threatened by the financial crisis in 2008, and the db Power Brands survey 2010 highlighted the stalling of some superpremium white spirits, but two progressions have sustained it.

Firstly, in mature markets, where disposable incomes have dropped during the economic downturn, consumers have proved unwilling to compromise in certain sectors such as spirits, and rather than buy cheaper brands, have simply consumed less.

Hence the term “weekend millionaires” was coined to describe those who rarely go out, but splurge on the best when they do.

Secondly, rapid wealth creation in emerging markets has brought about new sources of demand for upmarket spirits.

However, unlike the US, the call is almost exclusively for expensive brown sprirts, above all Cognac and Scotch.