Anna Hamill asks, are premium spirits brands pricing themselves out of the weekly shop?
As the cost-of-living crisis deepens, consumers are becoming increasingly discerning about where they spend their money. Rising costs across the board mean many households are trimming their budgets, leaving premium spirits brands at risk of being sidelined as occasional indulgences rather than regular staples.
The challenge today isn’t just competing against other spirits – it’s vying for a share of limited disposable income alongside every other premium product in a challenging economic environment. For spirits brands, the question is no longer whether premiumisation works; it’s how to ensure it doesn’t alienate the cost-conscious consumer. And while things might be tougher than ever in the sector, spirits brands should embrace these challenges as a reason to rethink their position and get creative with their brand and story.
Redefining value
Premiumisation has been a winning strategy in the spirits sector, but its continuing success will rely on delivering real value. Value doesn’t mean “cheap”; it means worth paying for – a perception that comes from a product’s quality, integrity, and the story behind it. Consumers increasingly demand more than a high price tag – they want brands they can trust and products that align with their values.
Trust today extends beyond product quality. Shoppers are considering everything from a brand’s environmental footprint to their social impact. A new bottle design alone won’t justify a price increase, but if that redesign reduces glass waste or achieves sustainability certifications like B Corp status, retailers and consumers are going to be more likely to support it.
Today, people’s values underpin what they deem to be ‘value’ when it comes to their purchasing decisions. Sustainability credentials are playing an increasingly important role; as is the lifestyle-led shift towards low- and no-alcohol options. These offerings reflect a broader shift toward more mindful alcohol consumption – especially with Gen Z audiences.
Such health-conscious trends are reshaping the spirits sector in multiple ways. For instance, additive-free tequilas are gaining traction among consumers who value authenticity and transparency. These offerings stand in stark contrast to celebrity-backed brands, which some see as more about marketing than substance. Patron, once a leader in the tequila market, has faced challenges maintaining its cache as consumers shift their attention to brands offering more differentiated and meaningful propositions.
Selling experiences
In today’s competitive landscape, the most successful spirits brands go beyond drinks: they’re all about experiences. An emotional connection with the consumer can make a product feel indispensable, even at a premium price.
Aperol, for instance, isn’t just selling a drink; it’s selling a moment in the sun.
Everything about Aperol’s positioning, from its marketing to its product design, evokes a sense of vibrancy and togetherness that’s about the combination of the product and the occasion.
Similarly, tequila brands like Casa Dragones and Clase Azul emphasize provenance, and craftsmanship, carving out a space in the premium spirits market by selling more than just liquid – they sell a story.
Experience is also about occasion: ready to drink cocktails, for instance, are about living on-the-go – they connote a more party-led, devil-may-care attitude than pouring vodka onto ice in a chic glass tumbler. Plus, RTDs make premium spirits feel attainable for the weekly shopper. This approach retains the essence of the brand while offering an entry point for budget-conscious consumers.
The new luxury
Just as trends around health and cultural cache have shifted, the meaning of ‘luxury’ has also evolved. Where once it was synonymous with exclusivity and high price, today’s luxury reflects deeper values. Consumers are asking, ‘What makes this product truly special?’
While many businesses are looking at every opportunity to cut back on costs, compromising the quality of your packaging at shelf and in the hand is a dangerous game. Semiotic cues like high-quality paper stocks, embossing, or foiling remain powerful tools for signaling quality, but they must be paired with substance. Investing in small yet meaningful details, whether it’s refining the product itself or its packaging, can reinforce the perception of luxury without alienating cost-conscious buyers.
Smart collaborations
Alongside such product diversifications, collaborations are another effective way for spirits brands to bridge the gap between luxury and practicality. Pairing premium spirits with complementary products and unexpected innovations can add value and broaden appeal.
A standout example is Absolut’s tomato vodka pasta sauce partnership with Heinz.
This collaboration placed the brand in a completely new category while maintaining its premium edge. Such partnerships have the potential to make premium spirits feel relevant to new people and in new moments.
Similarly, gifting combinations like Bloody Mary kits provide an opportunity to showcase the brand in a way that’s experiential and aspirational. By curating complementary products, brands can encourage consumers to spend more while delivering a richer, more satisfying experience.
Beyond the bottle
As economic pressures tighten, spirits brands must work harder than ever to remain in shopping baskets. This requires a constant awareness of the threshold between affordable and unattainable luxuries. A portfolio that spans multiple price points is key. Brands must clearly define the role of each product in their lineup. Are you driving volume or building value?
More importantly, brands must consistently build perceptions of quality and emotional connection. Those spirits brands that succeed will be the ones that adapt to changing consumer expectations while maintaining their unique appeal.
In today’s landscape, spirits brands are no longer just selling beverages – they’re selling trust, values, and aspirations. Whether it’s evoking a moment, promoting sustainability, or aligning with health trends, the narrative becomes the key to justifying a premium price.
By finding the balance between aspiration and accessibility, delivering genuine value, and creating memorable experiences, spirits brands can secure their place in both the hearts and shopping baskets of consumers, despite the challenges of the current economic climate.
Anna Hamill is Managing Director of drinks branding specialists Denomination
