Summary of food premiumisation trends
- Premium food demand rises as consumers seek affordable luxury in uncertainty
- Gourmet market predicted to grow strongly with 6.05 percent CAGR forecast
- Inflation reduces demand for confectionery and meat as shoppers trade down
- Premium now defined less by price and more by consumer value
- Future premium growth may come from GLP-1 focused nutritional support products
Premiumisation is increasingly becoming the emphasis in food and beverage.
In fact, such food is growing in popularity. According to market analytics platform Mordor Intelligence, the gourmet food market is expected to grow at a compound annual growth rate (CAGR) of 6.05% between 2025 and 2030.
Consumers are increasingly looking for affordable luxuries and small treats in what many see as bleak, uncertain times.
But this very economic instability is also harming some categories, forcing consumers to trade down.
How is inflation affecting premium categories– both for good, and ill?
What is premiumisation?
Premiumisation is defined by the Cambridge dictionary as “the activity of trying to make a product or service appear more expensive and special”.
Essentially, premiumisation puts the emphasis on quality.
While it’s not necessarily associated with a specific price point – although more often than not, it’s more expensive than non-premium – it frames a product as luxury, gourmet or rarified, rather than affordable.
Most food categories are embracing premium, to some extent.
For example, the premium drinks category is seeing growth in a number of areas, such as luxury hot chocolate and celebrity-backed beverages.
According to Emily Keogh, founder and managing director of communication agency Palm PR, many consumers are attracted by premium brands because they provide affordable luxuries.
During a time of sky-high food prices, paying a little more for a premium product helps consumers feel they are treating themselves, without breaking the bank.
Which premium categories are being affected negatively be inflation?
Despite the correlation between inflation and the demand for ‘affordable luxuries’, some premium categories have seen demand fall due to high prices, according to Sam Hart, business unit director for client impact at analytics company Worldpanel by Numerator.
For example, premium confectionery has struggled when priced too high. “The clearest example of a category where premiumisation has fallen behind is confectionery”, says Hart.
“Raw cocoa inflation has pushed up the price of chocolate and meant that shoppers have steadily reduced the amount of chocolate they buy and traded down to other, cheaper alternatives.
“Manufacturers have still brought premium products to market, but shoppers are mitigating the impact of inflation by trading down, prioritising affordability over premiumisation.”
Many have predicted growth in the premium confectionery market – according to marketing research company M2 Square Consultancy, it is predicted to have a compound annual growth rate (CAGR) of 10.4% until 2023. Yet if Worldpanel’s Hart is correct, high prices are proving too much for some consumers even for premium products.
Meat is another. As meat prices go up, consumers are less interested in seeking out premium meat, as there are other, cheaper avenues for them to follow.
“There are several routes for shoppers to trade down in fresh meat, including the protein source, fat percentage content and compromising on features like organic, and the data shows us that shoppers are seeking savings in this category, rather than trading up.”
What really makes a product ‘premium’?
The meaning of the premium category may be changing. According to Ananda Roy, senior vice president of thought leadership for Europe at marketing analytics company Circana, price and premium are becoming uncoupled.
“What consumers pay today for everyday items was the cost of a premium basket last year. The price gap between everyday and premium is closing.”
Premiumisation is therefore becoming less linked to price itself, he suggests, and more to providing consumers with things that they value.
“When everything is expensive, shoppers are still willing to pay more for what they value and they are increasingly willing to treat themselves to these ‘little luxuries’, finding ways to justify and absorb the price lift, even if it means buying fewer items or looking for savings on other purchases.”
For example, organic products, healthy products or products with transparent ingredients sourcing all provide something valuable to consumers. Even high protein products can be considered ‘premium’.
The premium category is still prominent. Yet what it means is changing.
