The 3-P strategy: Navigating the premium wave in alcoholic beverages

Consumers are gravitating towards premium offerings and seeking new experiences while becoming mindful hosts. This is a golden opportunity for alcobev brands. Here's how they can do it

Updated: Apr 8, 2024 11:45:50 AM UTC
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Today, the alcoholic beverage industry is at a key point where intense competition meets changing consumer interests, with people increasingly looking to try and discover new flavours and experiences. Consumers are now moving towards drinking less but better, especially in burgeoning markets like India.

As the trend of premiumisation becomes increasingly prevalent, businesses are evolving to offer not just high-quality products but also crafting distinctive experiences that form and reinforce perceptions of high value. This strategy aims to tap into India's growing appetite for exclusivity and innovation, adapting to its demands with sophisticated offerings that capture consumers' imaginations.

An opulent opportunity

In recent years, a confluence of factors, including rising disposable incomes, exposure to globalisation, and the emergence of new-age retail stores and world-class bars in India, have sparked the premiumisation wave in the industry. This trend shows no signs of abating, with the market share of the premium or 'super-premium' alcohol drinks estimated to grow by 13 percent by year-end, as per the IWSR Drinks Market Analysis. As consumers increasingly gravitate towards premium offerings, brands have a golden opportunity to capitalise on this trend by innovating premium positioning strategies. In today's market, the emphasis on product quality stands out as a crucial factor in nurturing brand loyalty and a valuable strategy for growth in premiumisation.

Here are the Three Ps of Riding the Premiumisation Wave:

1) Premium packaging and liquids: Craftsmanship for the ultimate taste of luxury 

The allure of premium packaging goes beyond mere aesthetics; it's a powerful catalyst for consumer loyalty and repeat purchases. An elegantly designed package elevates a product's perceived value and weaves a narrative of exclusivity and sophistication—compelling consumers to revisit and re-engage with the brand. The power of premium craftsmanship in blending the finest liquids and design thus cannot be overstated, especially when catering to an aspirational consumer base prioritising quality over quantity.

While practical considerations such as functionality and convenience are paramount, standing out in a competitive market is crucial. Here, innovation becomes the foundation for capturing consumer attention and igniting interest by imbuing products with quality, sophistication, and authenticity. This approach not only distinguishes a brand but also elevates the consumer's consumption experience, making every purchase not just a transaction but a memorable experience to be cherished.

2) Pedigree Storyline: The story becomes the spirit 

As consumers become more discerning in their choices, their love for premium is no longer restricted to an elaborate price tag; rather, premiumisation is evolving into a multifaceted concept that also encompasses the art of storytelling. Today's consumers crave authentic discovery, and a key to capturing their intrigue is by curating experiences that relay back the brand's story, authenticity, and provenance. By weaving rich heritage and cultural backgrounds into their offerings, brands can create standout, immersive experiences that resonate with modern consumers—allowing them to connect more intimately with the brand through its origins, values, and storyline.

 3) Principled approach: Good Spirited 

In an era where 'better' is becoming synonymous with 'mindful', sustainability emerges as a key consideration for brands looking to position themselves in the premium category effectively. By aligning with evolving consumer values and adopting sustainable initiatives, progressive brands can contribute to the planet's long-term health and tap into a market segment that values sustainability.

Also Read: Pernod Ricard's first luxury Indian single malt goes global with a launch in Dubai

Brands need to be committed to doing the right thing for the planet, taking bold action to reduce their environmental footprint while catalysing a positive impact on the planet and communities at large. Today's conscious consumers are willing to pay a premium for sustainably produced spirits and drinks, underscoring the immediate opportunity for brands to adopt environmentally conscious practices that resonate with evolving consumer values. Additionally, consumers are seeking to become mindful hosts—well-informed ambassadors of mindful mixology and moderation. Brands can play a key role here by aiming to educate consumers on mindful premium drinking.

By embracing the three Ps strategy of premiumisation—premium packaging and liquids, pedigree storyline, and a principled approach—brands can carve out a distinct position in this highly sought-after segment to elevate their image, attract and retain a loyal consumer base, and champion long-term brand relevance in a rapidly evolving marketplace.

The writer is the managing director of Bacardi India.

The thoughts and opinions shared here are of the author.

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