No Longer A Luxury

August 1, 2006
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No Longer A Luxury
Sarah Theodore Editor
So far this year, 523 beverage products have been introduced in the United States with an “upscale” product claim, according to Datamonitor’s Productscan Online. That’s a third more products carrying that claim than were introduced a year ago. It’s a trend that is hard to ignore, and it has industry observers examining the psychology of Americans who are feeling the pinch of rising costs in some areas of their lives, while they continue to trade up to more expensive food and beverage products.
In this month’s cover feature, Mesa Distributing Chief Executive Officer Nick Gagliardi discusses the importance of import, craft and new upscale domestic beers to his company’s success in the San Diego market. “What’s exciting about these new items is that the consumers are trading up. They are not just another ‘me too’ product,” he told Beverage Industry Managing Editor Elizabeth Fuhrman.
ACNielsen also recently looked at the upscale beer market for its Consumer Insight publication, and says imported beers not only have increased their total share of market from 12 to 13.4 percent during the past two years, but have increased prices more than 5 percent during that time. ACNielsen examined the trend as part of a larger consumer packaged goods phenomenon, pertaining to everything from Starbucks lattes to iPods. It attributes this behavior to “aspirational shopping,” or consumers gaining personal validation by purchasing high-end merchandise. The report uses that old phrase “affordable luxuries” to describe these product trade-ups.
But when it comes to food and beverages, the high-end trend might have become more deeply ingrained in our culture than a quick moodboosting shopping fix. In a new book titled “The United States of Arugula: How We Became a Gourmet Nation,” Vanity Fair writer David Kamp discusses the post- World War II history of food in the United States, which took us, in the publisher’s words, “from the overcooked vegetables and scary gelatin salads of yore to the current heyday of free-range chickens, extra virgin olive oil, ‘Iron Chef,’ Whole Foods, Starbucks and that breed of human known as the ‘foodie.’”
I can’t plug the book — it won’t be on shelves until September — but I think it’s safe to say that its very publication shows how widespread the gentrification of our product preferences has become. Whether buying upscale is an affordable luxury or simply the new American standard, beverage brand owners and distributors will want to be sure they are part of the trend. ACNielsen suggests marketing, merchandising and communications strategies that appeal to image-conscious consumers, and refreshing or expanding portfolios through new entries, acquisitions or even major re-branding. Luxury, it seems, has become the new necessity.
SNEAK PEEK
SEPTEMBER
Category Focus — Bottled water
Beverage R&D — Fortification solutions
Packaging — Coding technology
Marketing — Ethnic marketing
InterBev on-floor
OCTOBER
Special Report — Retail initiatives
Category Focus — Private label
Beverage R&D — Sensory ingredients
Packaging — Environmentally friendly options

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