The End of Premiumisation?

Over the last decade of economic boom, the big brands we are so familiar with stemmed the growth of retailer private label. Not only that, most companies adopted a strategy of premiumisation confident that consumers had both the desire and ability to pay more for perceived quality.

Now in more straitened times, private label is resurgent helped by clever retailer strategies such as the Waitrose range of 1,400 products known as “Essentials”.

Kellogg’s Cornflakes 500gm:£1.94
Essential Waitrose Cornflakes 500gm:95p
Saving: 51%

Sainsbury’s now estimates that two thirds of their customers buy from their ‘Basics’ and ‘Taste The Difference’ ranges. Price comparison website uswitch estimate that 31 million consumers are trading down from familiar household brand names to cut the cost of weekly shopping.

Marginal differences in quality alone are insufficient to maintain premium pricing – especially when the difference between a value mustard and a premium mustard is only 3% more mustard powder.

Premiumisation is looking increasingly like a strategy for failure rather than for long term success.