Discover Pockets of Demand: The Premium Opportunity

The pandemic-induced economic slump presents as an atypical K-shaped recovery, with many consumers enjoying healthy incomes while others struggle to make ends meet. For consumers across all income levels, spending patterns have shifted as stay-at-home behaviors continue, and they are spending more on food-at-home and spending less on discretionary purchases, such as foodservice, professional services (e.g., spa, medical / dental), travel and entertainment.

This report, “The Premium Opportunity,” is the first in a new series of reports from IRI that help CPG manufacturers and retailers discover pockets of demand to ensure continued growth into 2021 and beyond. Here we highlight how consumers of all income levels look to find joy and elevated experiences with premium CPG products.

Observations

• Despite ongoing economic uncertainty, anticipated recessionary spending behaviors, including an increase in spending on private label and value brands, as well as a shift to value channels, haven’t occurred to date.
• Shoppers are trading up in grocery and other large format channels, with premium/super premium products gaining share at the expense of value tier and private label. Both high- and low-income shoppers are trading up in many categories, including food and beverage, cleaning and personal care.

Implications

• Manufacturers and retailers need to ensure they drive sales of premium and super-premium products, even in lower-income trading areas.
• Companies should tailor price-range architecture and assortment to meet the unique needs of shoppers by channel.