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Weekly Comment

Putting a premium on substance over style

24-Oct-2005

Food producers are flogging the term 'premium' for all it's worth, threatening to flood a market that relies on exclusivity for its success with well-packaged tat.

Consumers, we're told, are more affluent these days. They require something for the weekend, something special, an indulgence at a respectably jacked up price.

And boy do they get it. Over 25,640 new food products were launched in Europe last year, with a staggering 4,365 of them claiming to be premium. That's nearly a fifth.

 

In the UK, food manufacturers have really gone to town. Nearly half of the 1,519 new food products launched last year were premium.

 

Statistics like this suggest that premium is becoming a devalued term. It doesn't make sense to have half of all new products designated as premium.

 

And eventually the façade is exposed. That fabulous little box of chocolates, tied with a little bow and personalised with a gold-edged card, promises decadence and luxury.

 

But if the product does not deliver, then the sublime façade of premium quickly loses its lustre. The consumer is unlikely to buy that product again, not for himself or for anybody else.

 

An all too familiar tale of misfortune, courtesy of some quick buck thinking marketers, cashing in on the run away train that is the premium trend - premium being the term for a higher price justified by fancy packaging and big budget brand building.

 

The only premium element here is that being earned by those clever people that made us part with our money.

 

Chocolate lovers have been hit harder than most. Confectioners have embraced the premium rush more than any other sector; luxury chocolate makes up 18 per cent of the total confectionery market in the UK, making up 23 per cent growth since 1999.

 

With the overall market somewhat stagnated with only 0.7 per cent growth, confectionery's cash cow keeps getting fed. With Christmas nearly here, confectioners will surely be looking nice and jolly after all those gift purchases.

 

But will confectioners give the consumer what they really want? It is certainly in their interests to do so. After all a greater market share is for life, not just for Christmas.

 

In a market awash with premium lines consumer's true customer loyalty can only be gained with genuine premium products, which has to mean taste, and not an impressive marketing budget.

 

Ferrero Rocher's famous Ambassador's reception adverts, which enjoyed a €4.8 million comeback in 2003 in the UK and Ireland, is a case in point. The campaign featured at 21 in a poll of the 100 best television adverts in the UK.

 

We may all be familiar with the brand, the advertising and the marketing campaign, but are we buying the chocolate? Apparently not.

 

Ferrero has enjoyed a massive presence in the confectionery market, but for all its brand clout, consumer loyalty has not been forthcoming. Consumers see no real reason to go back to a product, now sold at budget supermarket Aldi, which is still branded and priced as premium.

 

Fleeting sales is something that's never been a worry for the UK's fastest growing chocolate business, Green and Blacks.

 

An organic success story started in 1991, the firm has gone from strength to strength since achieving impressive results built on slow burn loyalty.

 

Never one to spend big on advertising, word of mouth and editorial featuring has allowed Green and Blacks to attain 66 per cent year on year growth.

 

Its products are premium, and what the consumers are telling their friends has nothing to do with the products modest packaging. With most products containing a minimum of 35 per cent in cocoa solids and some lines with up to 70 per cent, the premium here is ingredients.

 

With the premium market nearing saturation point, the concept of premium just doesn't work unless there is a real difference. Only through establishing and defining products with real substance will food makers achieve long-term gains.

 

Premium must live up to its name and deliver what it promises.

 

The premium trend is in full flow and those that discover what it actually means to be premium will not only enjoy gains now but also establish a consumer base that will grow and develop into the future.

 

Consumers may have become more affluent, but they will always be sensitive to the quality of the food products they buy.