moving on up - nielsen€¦ · between 2013 and 2015, premium segment growth outpaced total growth...

M O V I N G O N U PPREMIUM PRODUCTS ARE IN HIGH DEMAND AROUND THE WORLD

DECEMBER 2016

2 GLOBAL PREMIUIMIZATION REPORT

PREMIUM PRODUCTS ARE EXPERIENCING STRONG SALES GROWTH AROUND THE WORLD

AROUND THE WORLD• Thepremiumsegmentisexperiencingstronggrowth—outpacingtotalcategorysalesinmanymarkets—

withstrongpotentialforcontinuedgrowthasconsumerbuyingpowerandspendingrisearoundtheworld.

• Consumersaren’tjusttradinguponbig-ticketpurchases;they’realsogoingpremiumoneverydayitems.

Thepersonal-care,beauty,home-careandvariousfoodandbeveragecategoriesareexperiencingstrong

salesgrowthinmanymarketsaroundtheworld.

• Themostcommonlycitedfeaturesofpremiumproductsareexceptionalquality(citedby54%)and

superiorperformance(46%).Themostsuccessfulpremiumproductsarethosethatperformanimportant

jobforwhichpreviouslyavailablesolutionswereunsatisfactoryornonexistent.

• Productswithenvironmentalorsocialbenefitshavepremiumpotential.Roughlyfourin10global

respondentsthey’reverywillingtopayapremiumforproductsmadewithorganicorall-naturalingredients

(42%)orenvironmentallyfriendlyorsustainablematerials(39%),and31%saythey’reverywillingtopaya

premiumforsociallyresponsibleproducts.

• Consumersbuypremiumproductsforbothrationalandemotionalreasons,butthelatterresonatemore

stronglyinemergingmarketswhereaspirationsforstatusandaccomplishmentarehigh.

Aroundtheworld,consumersarelookingforatasteofthegoodlife.And

it’snotjustthosewhoarewealthy.Salesofproductsinthe“premium”

tier—whichNielsendefinesasgoodsthatcostatleast20%morethan

theaveragepriceforthecategory—aregrowingatarapidpace.Infact,

thegrowthofthepremiumsectorinmanymarketsaroundtheworldis

outpacingtotalgrowthformanycategoriesoffast-movingconsumer

goods(FMCG).Between2012and2014,thepremiumsegmentgrew

21%inSoutheastAsia,morethandoubletherateofthemainstream

andvaluetiers(8%and10%,respectively).Premiumproductsgrew23%

overthesameperiodinChina.InLatinAmerica,growthinthepremium

segmentoutpacedtotalFMCGgrowthineverymarketexceptMexico

andVenezuelaoverthe12monthsendedJune2016.

3Copyright © 2016 The Nielsen Company

Factorsonboththesupplyanddemandsidesaredrivingthegrowth

ofthepremiumsegment.First,manyconsumershavegreaterbuying

powerthaneverbefore.Consumerpurchasingpowerisgrowingat7%

and9%peryearinChina,Indiaandsub-SaharanAfrica,accordingto

datafromtheWorldBank.TheOrganizationforEconomicCooperation

andDevelopmentpredictstheglobalmiddleclasswillincreasefrom

1.8billionin2009to4.9billionby2030,withthebulkofthisgrowth

comingfromemergingmarkets,particularlyAsia.Withmoremoney

intheirpockets,manyconsumersaretradingupforproductsand

servicestheycouldn’tpreviouslyafford.Inaddition,globalization—

whichhasgivenconsumersaccesstoabroaderassortmentof

products—andanincreasedfocusonthequalityofproductsandthe

shoppingexperienceinmanymarketshavefurtherfueledconsumers’

appetiteforpremiumproducts.

“Withincreasingaffluence,consumersarecravingproductsthatoffer

atotalexperience,saidLianaLubel,seniorvicepresident,Nielsen

InnovationPractice.”Beyondbasic-needproducts,manyconsumers

alsoarebuyingbasedonhowproductsmakethemfeel,andpremium

productstapdirectlyintoadesireforproductsthatprovidespecialized,

enhancedorexclusivebenefits.Butdeliveringontheirexpectations

oftheexperienceremainscritical,andthemostsuccessfulpremium

productsarethosethatperformanimportantjobforwhichpreviously

availablesolutionswereunsatisfactoryornonexistent.”

Premiumizationisn’tjustadevelopingmarkettrend.IntheU.S.,

premiumproductsaccountforroughlyone-quarterofdollarsalesin

thepersonal-andhome-carecategories(26%and23%,respectively),

growthinthepremiumsegmentoutpacedtotalcategorygrowthfor

personalcare(8%versus2%)andfood(8%versus3%)intheyear

endedApril2,2016.ThestoryissimilarinseveralEuropeanmarkets.

Between2013and2015,premiumsegmentgrowthoutpacedtotal

growthforseveralcategoriesanalyzed,includingshampooandsweet

biscuitsintheU.K.,Germany,FranceandItaly;softdrinksinGermany

andtheU.K.;andlaundryinFrance.

Theavailabilityofnew,innovativebrandsisalsofuelinggrowthin

thepremiumsegment,asfreshofferingscanbringexcitementand

increasedmarketingspendtoacategory.Thepremiumsegmenthas

beenabrightspotinaverychallengingretailenvironment,andbrands

areconsciouslyinnovatingtocapitalizeonthetrend.Forexample,

Nielsensalestrendsshowthatbetween2012and2014,premium

productsaccountedforalmost20%ofallnew-productdevelopment

inSoutheastAsia—andasmuchas40%incertaincategories(facial

cleanser,moisturizerandinstantnoodles).

ABOUT THE STUDY

Retailsalesdataissourcedfrom

Nielsen’sRetailMeasurement

Services,whichcapturessalesand

pricedatafrommajorretailchains.

Specificcountriesandtimeperiods

fromEurope,LatinAmerica,Asia-

PacificandNorthAmericaare

sourcedthroughoutthereport.

Surveyfindingsarebasedonmore

than30,000respondentswithonline

accessin63countries.Whilean

onlinesurveymethodologyallowsfor

tremendousscaleandglobalreach,it

providesaperspectiveonthehabits

ofonlyexistinginternetusers,not

totalpopulations.Indeveloping

marketswhereonlinepenetrationis

stillgrowing,respondentsmaybe

youngerandmoreaffluentthanthe

generalpopulationofthatcountry.

Inaddition,surveyresponsesare

basedonclaimedbehavior,rather

thanactualmetereddata.Cultural

differencesinreportingsentimentare

likelyfactorsintheoutlookacross

countries.Thereportedresultsdonot

attempttocontrolorcorrectforthese

differences;therefore,cautionshould

beexercisedwhencomparingacross

countriesandregions,particularly

acrossregionalboundaries.

4 GLOBAL PREMIUIMIZATION REPORT

Whilethepremiumizationtrendisgoingstrong,someofthebig-player

manufacturershavestruggledtokeeppacewithsmallerplayersacross

allpricetiers.Forexample,intheU.S.,the25largestfoodandbeverage

companiesdroveonly3%ofthetotalcategorygrowthfrom2011to2015,

whilecompaniesbelowthetop100drovenearlyhalf(49%).Whilethese

numbersindicateanunderlyingissuewithallnewproductdevelopment,

there’smoreatstakewithpremiumproductsbecauseoftheirhigher

revenuepotential.

“Premiumperceptionsarenotnecessarilydrivenbyastronglegacy

brand,andexistingbrandequitiescansometimesbeatoddswithshifting

perceptions,”saidLubel.“Asmallercompanybuildsbrandandproduct

perceptionssimultaneously,soitcanmoreeasilyadapttoconsumer

demand.Ontheotherhand,anestablishedbrand’simagemaybe

inconsistentwiththeneedsofanewerlaunch,andreconcilingthese

canbeadifficulttask;awell-knownmass-marketbrandmaystruggleto

establishitsofferingaspremium.Nonetheless,hugeopportunitiesremain

forestablishedbrandsinthepremiumspace,especiallywhenthereis

sizeablegapbetweenmass-marketofferingsandtheexistingpremiumtier.

Byleveragingtheirinfrastructureandretailpartnerships,largecompanies

areuniquelypositionedtoreachalargeconsumerbasewithlower-tier

premiumofferings.”

Thisstudyidentifiestheattributesconsumersarelookingforinpremium

productofferings,andrevealstheunderlyingsentimentbehindthe

reasonsforpurchase.Weexplorewhat“premium”meanstoconsumers,

andweidentifythecategoriesforwhichthey’remostwillingtopaya

higherprice.Inaddition,becausewillingnesstopayapremiumislargely

shapedbyhowconsumersfeelabouttheirfinancialsituation,welook

atperceptionsofspendingcapacity.Finally,weofferbestpracticesto

considerwhencompetinginthepremiumproductspace.

SMALL MANUFACTURERS (TOP 101 AND BELOW)

MID-TIER MANUFACTURERS (TOP 26-100)

RETAILERS (VIA PRIVATE LABEL)

LARGE MANUFACTURERS (TOP 25)49%

25%

23%

3%

BIG U.S. MANUFACTURERS STRUGGLE TO KEEP PACE WITH SMALLER PLAYERSSHARE OF CATEGORY GROWTH FOR U.S. FOOD & BEVERAGE MANUFACTURERS (2015)

Source:Nielsen2016BreakthroughInnovationReport,U.S.Edition

5Copyright © 2016 The Nielsen Company

SPENDING FREELY OR TIGHTENING PURSE STRINGS? SENTIMENT IS NOT NECESSARILY INCOME-DEPENDENTNearlyasimportantasconsumers’incomeishowtheyfeelabout

theirabilitytospend.Whenitcomestothosewhosaythey’redoing

wellfinanciallyandthosewhoarefeelingincreasinglycash-crunched,

responseratesvarybetweenemerging/developinganddeveloped

markets.

Inmuchoftheemerginganddevelopingworld,themiddle-class

populationisincreasing,soit’snosurprisethatmorerespondentsin

thesemarketsthanindevelopedmarketssaythey’vemadefinancial

gainsinthepastfiveyears.Morethansevenin10IndianandChinese

respondents(78%and72%,respectively)saythey’refinanciallybetter

offthantheywerefiveyearsago.Thissentimentisechoedbymorethan

halfofrespondentsineverySoutheastAsiancountryinthestudy,with

thehighestratesinVietnam(82%)andIndonesia(74%).Likewise,more

thanhalfofrespondentsinAfrican/MiddleEasternmarkets(55%)and

halfinLatinAmericanmarkets(50%)saythey’reinabetterfinancial

situation.

Indevelopedmarkets,perceivedfinancialgainshavebeenmoremodest.

RespondentsinNorthAmericaarethemostpositive,drivenprimarily

bythoseintheU.S.Forty-sixpercentofrespondentsintheU.S.say

they’refinanciallybetterofftodaythanfiveyearsago(comparedwith

36%inCanada).IntheadvancedPacificmarkets(AustraliaandNew

Zealand),sentimentissplitintothirds:aboutone-thirdofrespondents

(32%)believethey’rebetterofftoday,whileone-third(34%)thinkthey’re

worseoff,andanotherone-third(34%)saytheirfinancialsituationis

nodifferentthanitwasfiveyearsago.ThestoryissimilarinWestern

Europe:30%saythey’rebetteroff,and34%saythey’reworseoff.

RespondentsinCentralandEasternEuropearemorepositiveabout

theirfinancialsituationthantheirneighborstothewest.Fortypercent

ofCentralandEasternEuropeanrespondentssaythey’rebetterofftoday

thantheywerefiveyearsago.

6 GLOBAL PREMIUIMIZATION REPORT

PERCEIVED FINANCIAL GAINS ARE HIGHEST IN DEVELOPING MARKETS

ASIA-PACIFIC SUBSEGMENTS EUROPE SUBSEGMENTS

HOW RESPONDENTS FEEL ABOUT THEIR FINANCIAL SITUATION TODAY COMPARED WITH FIVE YEARS AGO

55%

25%

21%

66%

21%

12%

34%

31%

35%

55%

21%

23%

50%

21%

29%

45%

33%

22%

GLOBAL ASIA-PACIFIC

EUROPE AFRICA/MIDDLE

EAST

LATIN AMERICA

NORTH AMERICA

BETTER OFF

ABOUT THE SAME

WORSE OFF

Note:Percentagesmaynotequal100%duetorounding

Source:TheNielsenGlobalPremiumizationSurvey,Q12016

*Seepage24forlistingofcountriesincludedintheregionsandsubregions

CENTRAL AND EASTERN

EUROPE

WESTERN EUROPE

34%

36%

30%40%

36%

23%

ADVANCED PACIFIC

MARKETS

SOUTHEAST ASIA

ADVANCED ASIAN

MARKETS

CHINA INDIA

32% 70% 23% 72% 78%

34%

17%

40%

20% 16%34%13%

36%

8% 6%

7Copyright © 2016 The Nielsen Company

Perceivedfinancialimprovementsdon’talwaystranslatetoanabilityto

spend.Globally,only14%ofrespondentssaythey’reabletospendfreely.

Another52%saythey’reabletobuysomethingsjustbecausetheywant

them,while35%claimonlyenoughmoneytocoverthebasics(foodand

shelter).

Moreimportantly,spendingconsiderationsarenotnecessarilyconnected

toincomelevels.Forexample,inIndia,wherethegrossnationalincome

percapitabasedonpurchasingpowerparity1isonlyone-tenthofthelevel

intheU.S.,morethanone-thirdofrespondents(36%)saythey’reableto

spendfreely,comparedwithonly17%intheU.S.InseveralSoutheastAsian

markets,too,onlinerespondentsaremorelikelythantheglobalaverageto

saythey’reabletospendfreely;examplesincludeVietnam(23%),Thailand

(20%)andIndonesia(19%).InChina,spendingsentimentisnotably

different.Fewerthanonein10Chineserespondentssaythey’reableto

spendfreely(8%),but72%saythey’relivingcomfortably;onlyone-fifthof

onlineChineserespondents(20%)saytheycanonlyaffordbasics.

Incontrast,respondentsinEuropeandLatinAmerica—regionshit

particularlyhardby“GreatRecession”—feelmorefinanciallystrapped.

Fifty-eightpercentofrespondentsinCentralandEasternEuropeand46%

inWesternEuropesaytheycanonlyaffordthebasics,butsentimentvaries

withintheseregions.InWesternEurope,whilethemajorityofItalian(66%),

Finnish(60%)andFrench(57%)respondentssaytheycanonlyaffordthe

basics,only29%ofNorwegianandDanishrespondentssaythesame.The

patternissimilarinCentralandEasternEurope:78%ofSerbianand75%

ofUkrainianandGreekrespondentssaytheycanonlyaffordthebasics,

butagreementismuchlowerinTurkey(37%)andIsrael(35%).Fifty-four

percentofLatinAmericanrespondentssaytheycanonlyaffordthebasics,

withthehighestpercentagesinVenezuela(71%)andArgentina(58%),two

countriescurrentlyineconomiccrisis.

InAfrica/MiddleEast,spendingsentimentisdividedalonggeographiclines.

OnlinerespondentsintheMiddleEasterncountriesaresignificantlymore

likelythanthoseinAfricatosaythey’relivingcomfortbaly.Morethanhalfof

respondentsinSouthAfrica(55%),Morocco(53%)andEgypt(51%)saythey

canonlyaffordthebasics,butfewerthanfourin10respondentsinSaudi

Arabia(38%),Pakistan(36%)andUnitedArabEmirates(31%)saythesame.

Differencesalsoshowupamongthegenerations.Thefinancialstruggles

ofMillennialsarewell-documented.Yetacrosstheworldwidestudy,the

Millennialgeneration(ages21–34)istheagesegmentmostlikelytosayit’s

abletospendfreely(18%)andtheleastlikelytosayit’sonlyabletoafford

thebasics(29%).ThisholdstrueineveryregionexceptEurope,where

SilentGeneration(ages65+)respondentsaretheleastlikelytosaytheycan

onlyaffordthebasics.

1Source:TheWorldBank.GNIpercapitaisdollarvalueofacountry’sfinalincomeinayear,dividedbyitspopulation.Itreflectstheaverageincomeofacountry’scitizens.PPPGNIisgrossnationalincomeconvertedtointernationaldollarsusingpurchasingpowerparityrates;itisusedtoallowcomparabilityacrosscountries.

GLOBALLY, ONLY

14% OF RESPONDENTS SAY THEY’RE ABLE TO SPEND FREELY.

8 GLOBAL PREMIUIMIZATION REPORT

6%

40% 54%

16%

56%

28%

9%

40% 51%

17%

59%

24% 14%

52%

35%

13%

41% 46%

GLOBAL ASIA-PACIFIC EUROPE

LATIN AMERICA

ADVANCED PACIFIC MARKETS

CHINA INDIA

SOUTHEAST ASIA ADVANCED ASIAN MARKETS

CENTRAL AND EASTERN EUROPE

WESTERN EUROPE

NORTH AMERICAAFRICA/MIDDLE EAST

9%

57%

35% 18%

49%

33%

9%

45% 47%

8%

72%

20%

36%

50%

14%

ASIA-PACIFIC SUBSEGMENTS EUROPE SUBSEGMENTS

6% 37%

6%

58%

11%

42% 46%

MUCH OF THE WORLD HAS SOME DEGREE OF DISPOSABLE INCOME

PERCEIVED FINANCIAL SPENDING ABILITY TODAY

Note:Percentagesmaynotequal100%duetorounding

Source:TheNielsenGlobalPremiumizationSurvey,Q12016

*Seepage24forlistingofcountriesincludedintheregionsandsubregions

I’M ABLE TO SPEND FREELY

I LIVE COMFORTABLYAND AM ABLE TO BUYSOME THINGS JUSTBECAUSE I WANT THEM

I ONLY HAVE ENOUGHMONEY FOR FOOD,SHELTER AND BASICS

9Copyright © 2016 The Nielsen Company

CONSUMERS DEFINE PREMIUM BY MORE THAN PRICEWithmanyconsumerssayingtheyhaveatleastsomediscretionary

income,thepremiumsegmentisrifewithopportunity.Andwhen

itcomestopurchasingpremiumproducts,forthevastmajorityof

respondents,it’snotaboutthehigher-than-averagepricetag.Infact,

lessthanone-thirdofglobalrespondents(31%)saytheyconsider

aproducttobepremiumbecauseit’sexpensive—aclearwarning

tocompanieswhopushuppriceswithoutprovidingaveryclear

valuepropositiontosupportthechange.Rather,respondentsdefine

premiumproductsbyexceptionalqualityandperformance.Fifty-

fourpercentofglobalrespondentssayapremiumproductismade

withhigh-qualitymaterialsoringredients.Thisisthemostcommon

responseineveryregionandnearlyeverycountryinthesurvey.In

addition,46%ofglobalrespondentssayapremiumproductisdefined

bysuperiorfunctionorperformance.

Nearlyfourin10globalrespondentssaypremiumproductsare

definedbysuperiordesignorstyle(38%)orbyawell-knownbrand

name(38%),buttheseattributesaremoreimportantinsomemarkets

thanothers.Superiorstyleismorecommonlycitedinemerging

markets,includingVenezuela(50%),Vietnam(49%),China(47%),

Egypt(45%)andafewCentralandEasternEuropeanmarkets(Croatia,

46%;Serbia,45%;andTurkey,43%).Atrustedbrandnamealsois

morecommonlycitedinAsiaandinemergingmarkets,including

Vietnam(61%),thePhilippines(59%),SouthAfrica(57%),Malaysia

(51%),Estonia(50%)andKazakhstan(50%).

“Connectiontoabrand’svaluesremainsparticularlyimportantin

emergingmarkets,forbothpracticalandemotionalreasons,”said

Lubel.“Asconsumersmoveuptheeconomicladder,they’reattracted

toaspirationalbrandsthatsignalthey’veachievedacertainlevelof

success.Nonetheless,formany,disposableincomesremainlimited,

andfortheseconsumers,trustedbrandsprovideanassuranceof

quality,minimizingtheriskofwastingmoneyonaproductthat

doesn’tfulfillexpectations.”

10 GLOBAL PREMIUIMIZATION REPORT

Whileahighpricetagfallsrelativelylowonthelistof

definingfeaturesforpremiumproductsglobally(eighthout

of11featuresintermsofthepercentagewhoselectedeach

attribute),itissignificantlymoreimportantinEurope,cited

by45%ofrespondentsinCentralandEasternEuropeand

33%inWesternEurope.Infact,thenotionthataproductis

expensivetopsthelistofmostcommonlycitedpremium-

productattributesinRussia(63%),Ukraine(tiedwith

qualitymaterialsat62%)andFrance(56%),andit’ssecond

inSwitzerland(43%),Germany(41%),Austria(39%)and

Belgium(37%).Sentimentdoesvarywithintheregion,

however.InmanyotherEuropeanmarkets,includingItaly

(15%),Bulgaria(12%)andFinland(9%),thepercentageof

respondentswhosayapremiumproductisdefinedbycost

iswellbelowtheglobalaverage.

Source:TheNielsenGlobalPremiumizationSurvey,Q12016

IT’S MADE WITH HIGH-QUALITY MATERIALS

OR INGREDIENTS

IT OFFERS SUPERIOR FUNCTION OR

PERFORMANCE

IT HAS SUPERIOR STYLE OR DESIGN

IT’S FROM A WELL-KNOWN OR TRUSTED

BRAND

IT PROVIDES SUPERIOR CUSTOMER

EXPERIENCE

IT OFFERS OR DOES SOMETHING NO OTHER

PRODUCT PROVIDES

IT’S FROM A LOCATION KNOWN FOR SUPERIOR

QUALITY

IT’S EXPENSIVE

IT’S HANDCRAFTED OR MADE USING

ARTISANAL METHODS

IT’S ONLY AVAILABLE TO PEOPLE OF A CERTAIN

STATUS/EXCLUSIVITY

IT’S HARD TO FIND/SCARCE

54%

46%

38%

38%

37%

37%

33%

31%

29%

22%

21%

PREMIUM PERCEPTIONS ARE ABOUT MORE THAN PRICE

PERCENTAGE WHO SAY ATTRITUBE IS WHAT MAKES A PRODUCT “PREMIUM”

GLOBAL

11Copyright © 2016 The Nielsen Company

PERCENTAGE WHO SAY ATTRIBUTE IS WHAT MAKES A PRODUCT “PREMIUM”

MILLENNIALS VS. BOOMERS: PREMIUM PERCEPTIONS RANK SIMILARLY, BUT SENTIMENT ABOUT QUALITY AND EXCLUSIVITY VARIES

MILLENNIALS(21-34)

BOOMERS(50-64)

Source:TheNielsenGlobalPremiumizationSurvey,Q12016

Thedefiningfeaturesofpremiumproductsareremarkablysimilaramong

respondentsofallages.High-qualitymaterialsoringredientsarethe

mostcommonlyselectedfeaturesforeverygeneration,thoughBoomers

(ages50–64)andSilentGenerationrespondentsaremorelikelytocite

thisfeature(69%and61%,respectively)thanMillennialandGeneration

Z(ages20andunder)respondents(50%and45%,respectively).Younger

respondentsaremorelikelytocitesuperiorstyleordesignandsuperior

customerservice.

50%

45%

40%

39%

39%

37%

33%

31%

29%

24%

24%

61%

47%

31%

34%

32%

38%

33%

31%

31%

15%

18%

IT'S MADE WITH HIGH-QUALITY MATERIALS OR INGREDIENTS

IT OFFERS SUPERIOR FUNCTIONOR PERFORMANCE

IT PROVIDES SUPERIORCUSTOMER EXPERIENCE

IT'S FROM A WELL-KNOWN ORTRUSTED BRAND

IT HAS SUPERIORSTYLE OR DESIGN

IT OFFERS OR DOES SOMETHING NOOTHER PRODUCT PROVIDES

IT'S FROM A LOCATION KNOWNFOR SUPERIOR QUALITY

IT'S EXPENSIVE

IT'S HANDCRAFTED OR MADE USINGARTISANAL METHODS

IT'S HARD TO FIND/SCARCE

IT'S ONLY AVAILABLE TO PEOPLE OF ACERTAIN STATUS/EXCLUSIVITY

12 GLOBAL PREMIUIMIZATION REPORT

CATEGORICAL IMPERATIVE: UPGRADABLE GOODS WITH PREMIUM POTENTIALThecategorieswithpremiumpotentialareasdiverseasanyretailstore

shelf,butthereisneverthelessacommonthread:Forfast-moving

consumergoods,everydayconsumablesrisetothetopofthelistof

categoriesforwhichglobalrespondentsmostoftensaythey’rewillingto

tradeup.

Whileelectronicsandclothing/shoestopthelist(citedby37%and

36%,respectively),respondentsinmostregionsalsoarewillingto

considertradingupforbettermeatorseafood.Infact,thiscategory

iscitedmostoftenindevelopedmarkets,andit’samongthetopfive

categoriesforwhichrespondentswillconsidertradingupinSoutheast

Asia,LatinAmericaandAfrica/MiddleEast.Inaddition,threein10global

respondents(30%)saythey’llconsiderpayingmorefordairyproducts.

AnanalysisofsalesdataintheU.S.showsconsumersarebackingupthis

sentimentwiththeirwallets.Between2014and2016,premiummilksales

grew52%,drivenbythesaleofmilkalternatives,suchasalmondmilk.In

fact,salesofalmondmilkgrew250%between2010and2015,whilethe

totalmilkmarketshrankbymorethan$1billion.

“Inmanycases,successfulinnovationresultsfromreimaginingtraditional

categorydefinitions,”saidLubel.“Forexample,thedairycategoryin

theU.S.wasstagnantbut,byredefiningthecategorytoincludedairy

alternativessuchasalmondmilk,brandswereabletooffermorepremium

products,andthereforebringnewconsumersintothecategoryand

reengagelapsedconsumers.”

Personal-careandbeautycategoriesalsohavestrongupgradepotential,

andinnovationcanplayanimportantpartinfulfillingunsatisfiedneeds.

Morethanaquarterofglobalrespondentssaythey’llconsiderbuying

premiumhair-care(27%),body-care(26%)andoral-care(26%)products,

andananalysisofsalesdatainseveralmarketsaffirmsthepotential.

Indeed,thepremiumsegmentaccountsforroughlyaquarterofdollar

salesinthepersonalcategoryintheU.S.andSoutheastAsia(26%and

23%,respectively),anditsshareisevenhigherinsomesubcategories.In

theU.S.,fortheyearendedApril2,2016,morethanhalfofdollarsalesin

theshaving-needscategory(52%)andnearlyone-thirdintoothpaste(32%)

13Copyright © 2016 The Nielsen Company

werefrompremium.InSoutheastAsia,premiumaccountedfor55%of

facemoisturizer,39%offacecleanserand36%oftoothpastesales,and

salesinallofthesecategoriesgrewbymorethandoubledigits(24%,

24%and18%,respectively)between2012and2014.Shampooisanother

brightspotforpremiumproducts.Thepremiumsegmentaccounted

for31%ofshampoosalesinSoutheastAsia;13%intheU.K.,Germany,

FranceandItalycombined;and10%intheU.S.Andthepremium

shampoosegmentgrewbydoubledigitsintheU.S.(42%overtheyear

endedApril2016)andSoutheastAsia(14%from2012to2014).Inthe

fourEuropeanmarketscombined,premiumshampoosalesgrew9%

from2014to2015.

Outsidethesecategories,however,willingnesstoconsiderapremium

offeringvarieswidelybymarket,duetoculturaltastesandpreferences.

InChina,cosmeticsaresecondonthelistofcategoriesforwhich

respondentsaremostlikelytoconsiderapremiumproduct.InIndia,

fruitjuiceandriceorgrainsaresecondandthird,respectively,onthe

listofcategoriesforwhichconsumerswillconsidertradingup.In

SoutheastAsia,vitaminsareamongthetopthreepremium-potential

categories;thisistheonlyregioninwhichvitaminsareamongthetop

fivecategories.

RespondentsinthePacificandEuropesaythey’rewillingtopaymorefor

abettercupofcoffeeortea;inbothregions,thisisamongthetopfive

categoriesforwhichconsumerssaythey’rewillingtoconsiderpayinga

premium,citedby28%and27%ofrespondents,respectively.Justover

one-fifthofNorthAmericanrespondentssaythey’llconsiderbuying

premiumcoffeeortea(21%),andananalysisofsalesdataintheU.S.

showspremiumliquidcoffeeandteaaregrowingatatremendousrate.

Salesofliquidcoffeegrew203%,whilerefrigeratedandnon-refrigerated

liquidteagrew129%and116%,respectively,between2014and2016.

InNorthAmerica,consumerswantthebestfortheirpreciouspets,and

anotablepercentagesaythey’llconsiderpayingmoretogetit.One-fifth

ofrespondentsintheregionsaythey’llconsiderbuyingpremiumpet

food,eightpercentagepointsabovetheglobalaverage.Salesdatashows

thatU.S.petownersareputtingtheirmoneywheretheirmouthsare.

Between2012and2015,salesofsuper-premiumdogfoodbrandsgrew

atacompoundannualgrowthrateofover9%.

“It’snotjustbig-ticketitemsforwhichconsumersaretradingup,”said

Lubel.“Manyarelookingforeverydayitemsthatperformbetterorfulfill

theiremotionalneedsorsocialaspirationsatapricethatdoesn’tbreak

thebank.Thisisaripeopportunityspaceformainstreambrandsto

providepremiumproductsthatarestillaffordablecomparedtohigher-

tierpremiumservicesandofferings.”

14 GLOBAL PREMIUIMIZATION REPORT

SOUTHEAST ASIA

PERSONAL CARE BEVERAGE HOME CARE FOOD

22%

23%

10%

3%

34%

9%

11%

20%

Source:Nielsenretailmeasurementsalesdata,2014-2015

CATEGORIES WITH POWERFUL PREMIUM PRODUCT POTENTIAL

PREMIUM’S SHARE OF CATEGORY SALES AND TWO-YEAR* GROWTH RATE FOR SELECTED MARKETS

PREMIUM SHARE OF CATEGORY SALES PREMIUM SALES GROWTH

UNITED STATES

PERSONAL CARE

8%

26%FOOD

8%

13%BEVERAGE

7%

9%HOME CARE

2%

23%

Source:Nielsenretailmeasurementsalesdata,2014-2015

EUROPE

SHAMPOO SOFT DRINKS LAUNDRY SWEET BISCUITS

9%

13%

4%

20%

2%

26%

7%

11%

Source:Nielsenretailmeasurementsalesdata,2014-2015

Note:Seepage25forlistingofcountriesandcategoriesincludedintheanalyses*InEurope,categorysalesandgrowthrateisbasedononeyear.

15Copyright © 2016 The Nielsen Company

FEEL-GOOD GOODS: EMOTIONAL DRIVERS RESONATE STRONGLY IN EMERGING MARKETSConsumersbuypremiumproductsforbothrationaland

emotionalreasons,butthelatterresonatemorestronglyin

emergingmarketsthandevelopedones.

Fifty-twopercentofglobalrespondentssomewhatorstrongly

agreethatbuyingpremiumproductsmakesthemfeelgood,

withthehighestagreementinIndia(78%),China(66%),Africa/

MiddleEast(57%)andSoutheastAsia(53%).Agreementis

significantlylowerinWesternEurope(28%),thePacific(34%),

LatinAmerica(37%),theadvancedAsianmarkets(38%)

andNorthAmerica(43%).Asimilarpercentageofglobal

respondents(50%)saybuyingpremiumproductsmakesthem

feelconfident.Onceagain,agreementishighestinIndia(76%),

China(62%),SoutheastAsia(58%)andAfrica/MiddleEast

(55%).

Statusalsoisamoreimportantpurchasingconsideration

inemergingmarketsthanglobally.Nearlythree-quartersof

respondentsinIndia(74%)androughlyhalfinChina(54%),

Africa/MiddleEast(50%)andSoutheastAsia(47%)say

theybuypremiumproductsbecausetheseitemsshowother

peopletheyhavegoodtaste.Butpremiumproductsdon’t

justcommunicatesophisticationandtaste;they’realsoan

importantindicatorofaccomplishment.Roughlysevenin10

Indianrespondentssaytheybuypremiumproductsbecause

theseproductsmakethemfeelsuccessful(73%)orshowother

peoplethey’resuccessful(69%).AgreementislowerinChina

(56%foreachbenefit),Africa/MiddleEast(48%and40%,

respectively)andSoutheastAsia(47%and41%),butit’sstill

significantlyhigherthanindevelopedmarkets.

Source:TheNielsenGlobalPremiumizationSurvey,Q12016

BUYING PREMIUM PRODUCTS MAKES ME

FEEL GOOD

BUYING PREMIUM PRODUCTS MAKE ME

FEEL CONFIDENT

BUYING PREMIUM PRODUCTS SHOWS OTHER

PEOPLE I HAVE GOOD TASTE

BUYING PREMIUM PRODUCTS MAKES ME

FEEL SUCCESSFUL

BUYING PREMIUM PRODUCTS SHOWS OTHER PEOPLE I AM SUCCESSFUL

I BUY PREMIUM PRODUCTS TO

EXPRESS MYSELF

I BUY PREMIUM PRODUCTS SO I AM

SEEN AS A TRENDSETTER

MY FRIENDS’ PERCEPTIONS OF LUXURY BRANDS OR

PRODUCTS ARE IMPORTANT

I BUY PREMIUM PRODUCTS TO DIFFERENTIATE MYSELF

FROM OTHERS

I BUY PREMIUM PRODUCTS BECAUSE MY FAMILY AND

FRIENDS DO

52%

50%

45%

44%

41%

39%

36%

35%

34%

31%

PREMIUM PRODUCTS CAN BUY ME LOVE

SELF-ESTEEM

PERCEPTIONS/STATUS

GLOBAL AVERAGE PERCENTAGE WHO STRONGLY OR SOMEWHAT AGREE WITH STATEMENT

16 GLOBAL PREMIUIMIZATION REPORT

EMOTIONAL DRIVERS RESONATE STRONGLY IN SOME DEVELOPING MARKETS

PERCENTAGE WHO STRONGLY OR SOMEWHAT AGREE WITH STATEMENT

SELF-ESTEEM PERCEPTIONS/STATUS

ASIA-PACIFIC EUROPE AFRICA/MIDDLE EAST LATIN AMERICA NORTH AMERICA

Source:TheNielsenGlobalPremiumizationSurvey,Q12016

BUYING PREMIUM

PRODUCTS MAKES ME

FEEL GOOD

BUYING PREMIUM

PRODUCTS SHOWS OTHER

PEOPLE I AM SUCCESSFUL

63% 35% 57% 37% 43%

52% 26% 40% 26% 31%

55% 29% 48% 28% 36%

54% 31% 50% 35% 36%

61% 33% 55% 38% 39%

47% 18% 32% 25% 27%

BUYING PREMIUM

PRODUCTS MAKES

ME FEEL SUCCESSFUL

BUYING PREMIUM

PRODUCTS SHOWS OTHER PEOPLE I HAVE

GOOD TASTE

BUYING PREMIUM

PRODUCTS MAKES

ME FEEL CONFIDENT

I BUY PREMIUM

PRODUCTS SO I AM SEEN AS A

TRENDSETTER

17Copyright © 2016 The Nielsen Company

BUYING PREMIUM PRODUCTS

MAKES ME FEEL GOOD

BUYING PREMIUM PRODUCTS SHOWS OTHER PEOPLE I HAVE GOOD TASTE

BUYING PREMIUM PRODUCTS

MAKES ME FEEL CONFIDENT

BUYING PREMIUM PRODUCTS SHOWS OTHER PEOPLE I AM SUCCESSFUL

BUYING PREMIUM PRODUCTS

MAKES ME FEEL SUCCESSFUL

I BUY PREMIUM PRODUCTS SO I

AM SEEN AS A TRENDSETTER

I BUY PREMIUM PRODUCTS

TO EXPRESS MYSELF

I BUY PREMIUM PRODUCTS TO

DIFFERENTIATE MYSELF

MY FRIENDS’ PERCEPTIONS OF

LUXURY BRANDS OR PRODUCTS

ARE IMPORTANT

I BUY PREMIUM PRODUCTS

BECAUSE MY FAMILY AND

FRIENDS DO

Ineveryregion,youngerrespondents(GenerationZ,Millennialsand

GenerationX)aremorelikelythanoldergenerationstoagreethat

theypurchasepremiumgoodsforemotionalandsocialreasons.For

example,59%ofglobalMillennials,54%ofGenerationXand48%of

GenerationZrespondentsagreethatpurchasingpremiumproducts

makesthemfeelgood,comparedwith37%ofBoomersand26%of

SilentGenerationrespondents.

Source:TheNielsenGlobalPremiumizationSurvey,Q12016

GLOBAL AVERAGE PERCENTAGE WHO STRONGLY OR SOMEWHAT AGREE WITH STATEMENT

MORE MILLENNIALS PURCHASE PREMIUM GOODS FOR EMOTIONALAND SOCIAL REASONS THAN BOOMERS

MILLENNIALS(21-34)

BOOMERS(50-64)

50% 22%

53% 27%

44% 18%

40%

15%

42%

19%

43%

17%

59%

37%

52%

27%

57%

33%

47%

23%

SELF-ESTEEM PERCEPTIO

NS/STATUS

SELF-ESTEEM PERCEPTIO

NS/STATUS

18 GLOBAL PREMIUIMIZATION REPORT

STICKER SHOCK ABSORBERS: CONSCIOUS-CONSUMPTION PRODUCT ATTRIBUTES JUSTIFY A PREMIUM PRICE FOR MANYWhenitcomestothelikelihoodofpurchasingpremiumproducts,

notallproductattributesarecreatedequal.Certainproductqualities

justifyahigherpricetaginconsumers’minds—andconsumersare

morethanwillingtopayapremiumforthem.

Inaworldwhereconsciousconsumptionisgoingmainstream,

productswithanenvironmentalbenefitcanjustifyahigherpricetag

formany.Infact,roughlyfourin10globalrespondentsarehighly

willingtopayapremiumforproductsmadewithorganicorall-

naturalingredients(42%)orenvironmentallyfriendlyorsustainable

materials(39%),andjustunderone-thirdwillpaymoreforproducts

thatdeliveronsocial-responsibilityclaims(31%).

Environmentalfactorsareespeciallypersuasiveamongemerging-

marketrespondents.Infact,forproductsmadewithorganicand

all-naturalingredientsorenvironmentallyfriendlyorsustainable

materials,halformorethanhalfofrespondentsinTurkey,India,

China,Venezuela,VietnamandColombiasaythey’rehighlywillingto

payapremium.Respondentsinthesesamecountriesarealsohighly

willingtopayforproductsthatdeliveronsocial-responsibilityclaims,

althoughresponselevelsareslightlylower,rangingfrom45%to40%.

“GREEN” ATTRIBUTES HAVE PREMIUM POTENTIAL

GLOBAL AVERAGE PERCENTAGE WHO ARE HIGHLY WILLING TO PAY A PREMIUM FOR ATTRIBUTE

Source:TheNielsenGlobalPremiumizationSurvey,Q12016

COMES WITH HIGH QUALITY STANDARDS

PROVIDES SUPERIOR FUNCTION OR PERFORMANCE

CONTAINS ORGANIC/ALL NATURAL INGREDIENTS

CONTAINS ENVIRONMENTALLY FRIENDLY/SUSTAINABLE MATERIALS

OFFERS/DOES SOMETHING NO OTHER PRODUCT ON THE MARKET PROVIDES

DELIVERS SOCIAL RESPONSIBILITY CLAIMS

ORIGINATES FROM A SPECIFIC COUNTRY

48%

42%

42%

39%

34%

31%

21%

19Copyright © 2016 The Nielsen Company

Youngerrespondents(GenerationZ,MillennialsandGenerationX)are

morelikelytosaythey’rehighlywillingtopaymoreforeveryoneofthe

productattributesincludedinthesurvey.Whenitcomestotherelative

importanceoftheattributes,however,thegenerationsareremarkably

consistent,withhighqualitystandards,superiorfunctionorperformance,

andorganicorall-naturalingredientstoppingthelistamongrespondents

ofallages.

“Millennialsfaceveryrealeconomichardshipsandremainprice-

conscious,”saidLubel.“Yetmanyarewillingtopaymoreforhigher-

qualityproductsthatarecompatiblewiththeirlifestylesandvalues.

Infact,Millennialsaredrasticallyreshapingperceptionsofpremium,

withauthenticity,simplicity,healthfulness,sustainabilityandsocial

responsibilityservingasthenewindicatorsofpremium.”

MILLENNIALS MORE LIKELY TO PAY PREMIUM PRICES THAN BOOMERS

GLOBAL AVERAGE PERCENTAGE WHO ARE HIGHLY WILLING TO PAY A PREMIUM FOR ATTRIBUTE

COMES WITH HIGH

QUALITY STANDARDS

MILLENNIALS(21-34)

BOOMERS(50-64)

PROVIDES SUPERIOR FUNCTION

OR PERFORMANCE

DELIVERS SOCIAL RESPONSIBILITY CLAIMS

CONTAINS ORGANIC/ALL

NATURAL INGREDIENTS

ORIGINATES FROM A

SPECIFIC COUNTRY

CONTAINS ENVIRONMENTALLY FRIENDLY/SUSTAINABLE MATERIALSOFFERS/DOES SOMETHING NO

OTHER PRODUCT ON THE MARKET PROVIDES

Source:TheNielsenGlobalPremiumizationSurvey,Q12016

55%

35%

47%

31%

47%

31%

44%29%

40%20%

37%18%

27%11%

20 GLOBAL PREMIUIMIZATION REPORT

RESEARCH AND RECOMMENDATIONS RULE, BUT DON’T DITCH THE PITCH Whenitcomestotheinformationsourcesmostlikelytomotivateconsumers

totryanewpremiumproduct,globalrespondentsprimarilyrelyon

recommendationsfromfriendsandfamily(45%)andtheirownresearch

(37%).

Developing-andemerging-marketrespondentsaremorelikelytosaytheir

decisionsarebasedonadvertisingsources.Infact,onlineadvertisingis

themostcommonlycitedsourceinIndia,selectedby51%ofrespondents.

Innearlyallothermarkets(excepttheadvancedAsianmarkets),television

advertisingismoreinfluentialinencouragingnew-producttrialthanonline

advertising.Therearesomeregionaldifferences,however,withrespecttothe

mostimportantdriverofdecision-making.

Indevelopedmarkets,researchismorewidelycitedasadriverofnew-

producttrialthanrecommendations.InCentralandEasternEurope,53%

ofrespondentssaythey’lltryanewproductbasedontheirownresearch,

while44%sayrecommendationsfromfriendsandfamilyareanimportant

driver.InNorthAmerica,it’s38%and29%,respectively.Thegapisnarrower

isthePacificandWesternEurope.Thirty-fivepercentofrespondentsinthe

Pacificand30%inWesternEuropesaythey’lltryanewproductbasedon

theirownresearch,while32%and28%,respectively,saynew-producttrial

isbasedonrecommendationsfromfriendsandfamily.Intheadvanced

Asianmarkets,researchisthemostcommonlyciteddriverofnew-product

trialintheregionasawhole(46%),butJapanistheclearoutlier,at61%.In

HongKong(55%),Taiwan(49%),Singapore(48%)andSouthKorea(43%),

recommendationsfromfriendsandfamilyaremorecommonlycited.Research

isalsothemostcommonlyciteddriverofnew-producttrialinLatinAmerica,

byanarrowmargin(45%saytrialisbasedonresearch;42%sayit’sbasedon

recommendations).

Inemergingmarkets,withtheexceptionofLatinAmerica,respondents

conducttheirownresearchbutaremoredependentonrecommendations

fromfriendsandfamilywhendecidingtotryanewpremiumproduct.Sixty-

fivepercentofonlinerespondentsinChina,52%inSoutheastAsiaand46%

inAfrica/MiddleEastsaythey’lltryanewpremiumproductbasedonthe

recommendationsoffriendsandfamily.

21Copyright © 2016 The Nielsen Company

“Whenlaunchingnewproducts,brandsneedtoaligntheirmediatactics

withtheproduct’scorevaluepropositionandthetargetaudience,”

saidLubel.“Forexample,digitalmaybeamoreefficientchannel

thantraditionaladvertisingforabrandmarketinganenergydrinkto

Millennials.”

THE DRIVERS OF NEW PRODUCT TRIAL ARE MULTIFACETED

PERCENTAGE WHO SAY TRIAL OF NEW PREMIUM PRODUCT IS BASED ON SPECIFIC SOURCE

ASIA-PACIFIC EUROPE AFRICA/MIDDLE EAST LATIN AMERICA NORTH AMERICA

Source:TheNielsenGlobalPremiumizationSurvey,Q12016

RECOMMENDATION FROM FRIENDS/FAMILY

52% 35%

46% 42%

29%

RESEARCH

33% 41%

39% 45%

38%

IMPULSE

20% 28%

24% 16%

18%

ONLINE ADVERTISING

IN-STORE ADVERTISING

RADIO/OUTDOOR ADVERTISING

12% 5%

14% 12%

7%

29% 13%

30% 24% 23%

36% 14%

35% 24%

15%

TELEVISION ADVERTISING

37% 15%

36% 29%

23%

22 GLOBAL PREMIUIMIZATION REPORT

BEST PRACTICES FOR LAUNCHING PREMIUM PRODUCTSBrandscancapitalizeontherisingappetiteforpremiumproductsand

increasetheirbottomlinesbyputtingapremiumonpremium-focused

innovation.Basedonanextensivereviewofnew-productdevelopment,

Nielsen’sInnovationPracticehasidentifiedsixguidelinesfordeveloping

anddeployingpremiumproducts:

1. Create a highly differentiated offering.Allsuccessfulinnovations—regardlessofprice—shareacommoncharacteristic:Theyresolve

arealconsumerstruggle.Nielsenresearchhasfoundthat75%of

conceptstesteddon’taddressanyrelevantneedforconsumers,and

theseconceptshavelessthana5%chanceofsurvivalinmarket.

Differentiationisparticularlyimportantforpremiumbrands,asit

helpsjustifythehigherpricepointtheycommand.Accordingtoa

Nielsenanalysis,productconceptswithhigheruniquenessscores

tendtobelessprice-sensitive.

2. Ensure the product lives up to the promise.Allproductsneedtodeliveronexpectations,butit’sparticularlytrueforpremium

products.Higherpricessetahigherbarforproductperformance;

whenaproductispositionedaspremium,consumershaveless

toleranceforpoorperformanceorundesirableattributes.

3. Enhance the package design.Perceptionsofaproductbeginassoonasconsumerslayeyesonit.Packaginghelpsbrandsgetnoticed

and,moreimportantly,cansignificantlyelevateperceptionsofa

product.Infact,Nielsenresearchhasshownthatoptimizedpackage

designs—identifiedusingobjectiveconsumerfeedback—canboost

forecastedsalesbyanaverageof5.5%.Perceptionsofpremiumvary

widelybycategoryandculture,butseveralvisualcuescansignal

thataproductispremium.Theseincludesimpleoruncluttered

designs,moderngraphics,andpackagingthatlookshandcrafted.

Premiumpackagingmayalsoprovidefunctionalbenefits;for

example,lighter,easy-to-carrypackagesdesignedforcitydwellersor

compartmentalizedpackagesthatmakeon-the-goeatingeasier.

23Copyright © 2016 The Nielsen Company

4. Ensure the price is right.Premiumpricescanvarysignificantly

withinmostcategories—fromentry-levelofferingspriced20%to

50%higherthanaveragetoaffordableluxuries,withpricesatleast

threetimeshigher.Justasnewproductsshouldbedevelopedwith

theconsumerinmind,theyshouldbepricedbasedonconsumers’

valueperceptions.Additionally,pricingshouldfactorintherealistic

competitivecontextandretaildynamics.

Attributesthattendtolowerpricesensitivityandjustifyhigher

pricepointsincludeahighlyuniquevalueproposition,premium

packaging(i.e.,materialsandvisualaesthetics),smallerpackage

sizes,noveltyorlimited-editionpackagingandlongerpurchasing

cycles.Distributionchannelsalsocanaffectpricingexpectations.

Limitingdistributiontospecialtychannelscanenhancepremium

perceptions,butalsohaveanegativeimpactonvolumesales.

Brandscanalsojustifyhigherpricepointsbyconsciouslymanaging

consumers’frameofreference.Forexample,haircareproductsthat

promisesalon-qualityresultscanoftenchargemorethantraditional

productsbecausetheyhaveincludedprofessionalhairservicesin

theircompetitiveset.

5. Activate in a way that amplif ies the product’s unique proposition. Thereisnosingle“right”activationmodelforpremiumproducts,

butthereareseveralconsiderationsbrandsshouldkeepinmind

tooptimizetheirstrategy.First,brandsneedtobeconsciousof

howconsumersseetheirproductontheshelf:Whereisitplaced

inrelationtocompetitors,andwhatdoesthissignal?Inaddition,

brandsshouldpromotewithcaution,asdiscountingfrequentlyor

heavilycanerodepremiumperceptions.Finally,brandsreallyneed

toensurethattheirmarketingresonatesemotionally.Aswe’veseen,

thereasonsforbuyingpremiumbrandsaren’tjustfunctional,they’re

emotional(especiallyinemergingmarkets).Besidesdemonstrating

atechnicalbenefit,brandsneedtocommunicateahigher-order

emotionalbenefitthatconnectswithconsumers’aspirationsand

needs.

6. Provide sustained, long-term support.Mostnewproductsexperience

asalesdeclineintheirsecondyearinthemarket.Whatdistinguishes

theproductsthatgrowfromthosethatdecline?Thegrowthbrands

spendalmostthesameamountonadvertisinginyeartwoasthey

didinyearone.Incontrast,second-yearadspendingforbrands

thatdeclineequalsonlyaboutone-fifthoftheiryear-onebudget.

Givenpremiumproducts’higherpricetag,consumeradoptionmay

beslowerthanformainstreamorvalueproducts,sotheycould

requireevengreatermarketingsupport.Therefore,brandslaunching

premiumproductsmustplanforrobust,multiyearsupport.

24 GLOBAL PREMIUIMIZATION REPORT

COUNTRIES IN THE GLOBAL SURVEY

MARKET INTERNET PENETRATION

Australia 93%

China 52%

HongKong 80%

India 37%

Indonesia 34%

Japan 91%

Malaysia 68%

NewZealand 94%

Philippines 53%

Singapore 81%

South Korea 92%

Taiwan 84%

Thailand 60%

Vietnam 52%

ASIA-PACIFIC

MARKET INTERNET PENETRATION

Egypt 37%

Morocco 61%

Pakistan 18%

SaudiArabia 65%

SouthAfrica 49%

UnitedArabEmirates

92%

AFRICA/MIDDLE EAST

MARKET INTERNET PENETRATION

Canada 93%

UnitedStates 87%

NORTH AMERICA

EUROPE

MARKET INTERNET PENETRATION

Austria 83%

Belarus 59%

Belgium 85%

Bulgaria 57%

Croatia 75%

CzechRepublic 80%

Denmark 96%

Estonia 84%

Finland 94%

France 84%

Germany 88%

Greece 63%

Hungary 76%

Ireland 83%

Israel 73%

Italy 62%

Kazakhstan 54%

Latvia 82%

Lithuania 82%

Netherlands 96%

Norway 96%

Poland 68%

Portugal 68%

Romania 56%

Russia 71%

Serbia 66%

Slovakia 83%

Slovenia 73%

Spain 77%

Sweden 95%

Switzerland 87%

Turkey 60%

UnitedKingdom 92%

Ukraine 43%

MARKET INTERNET PENETRATION

LATIN AMERICA

Argentina 79%

Brazil 68%

Chile 80%

Colombia 59%

Mexico 56%

Peru 59%

Venezuela 62%

Source:MiniwattsMarketing,InternetWorldStats,June30,2016(EuropeisupdatedthroughNov.30,2015),www.internetworldstats.com

SeveralsubregionsinAsia-Pacificwerereferencedthroughoutthereport.Groupingswerebasedoneconomicandgeographicsimilarities.ThePacificincludesAustraliaandNewZealand;advancedAsianmarketsincludeHongKong,Japan,Singapore,SouthKoreaandTaiwan;SoutheastAsiaincludesIndonesia,Malaysia,Philippines,ThailandandVietnam.

TwoEuropeansubregionswerereferencedthroughoutthereport,basedongeography.WesternEuropeincludesAustria,Belgium,Denmark,Finland,France,Germany,Ireland,Italy,Netherlands,Norway,Portugal,Spain,Sweden,SwitzerlandandU.K.CentralandEasternEuropeincludesBelarus,Bulgaria,Croatia,CzechRepublic,Estonia,Greece,Hungary,Israel,Kazakhstan,Latvia,Lithuania,Poland,Romania,Russia,Slovakia,Slovenia,TurkeyandUkraine.

25Copyright © 2016 The Nielsen Company

ABOUT NIELSEN RETAIL MEASUREMENT SALES DATASoutheast Asia:Thedataisbasedonsalesinsixcountries(Indonesia,Malaysia,thePhilippines,Singapore,ThailandandVietnam)from

August2012toAugust2014.Sixteencategorieswereselectedacross

foursupercategories.Thecategoriesselectedforanalysiswerepersonal

care,whichincludedbabydiapers,facecleansers,facemoisturizers,

shampoo,toothpaste;homecare,whichincludedhouseholdcleaning

andlaundrydetergent;food,whichincludedbiscuits,breakfast

cereal,chocolate,icecream,infantmilkformula,instantnoodles;and

beverages,whichincludedcarbonatedsoftdrinks,ready-to-drinktea,

water.Allbrandswereassessedatthepacksizeleveltodeterminewhat

wastheirpriceindexrelativetothecategoryaverage.Premiumproducts

weredefinedasthosewithapriceindexof1.2orgreaterrelativetothe

categoryaverage.

U.S.:Thedataisbasedonsalesforthe52weeksendedApril2,2016.Growthfiguresareintermsofdollarsandwerecalculatedforthetwo-

yearperiodfromApril2014toApril2016.Theanalysisincluded20

categoriesfallingintofoursupercategories.Thecategoriesselectedfor

analysiswerepersonalcare,whichincludedfemininehygiene,men’s

facialmoisturizers,men’sfacialcleansers,shampoo,shavingneeds,

toothpaste;homecare,whichincludedhouseholdcleaningandlaundry

detergent;food,whichincludedeverydaychocolatecandy,frozen

entrees,icecream,saltysnacksandsnackbars;andbeverages,which

includedliquidcoffee,liquidtea,milk,refrigeratedliquidtea,shelf-

stablemilk,softdrinks,water.Premiumproductsweredefinedasthose

withapriceindexof1.2orgreaterrelativetothecategoryaverage.

Almondmilksalesdata(page12)wasforthefive-yearperiodended

December26,2015.Dataforsalesofdrydogfood(page13)isfor

2012to2015.Super-premium,asdefinedbytheproductmanufacturer,

includesproductswithmeatormeatmealasthefirstingredient.

Europe:ThedataisbasedonsalesinfourWesternEuropeancountries:

France,Germany,ItalyandtheU.K.Growthfiguresareintermsof

euros.Dataisfor2014to2015.Theanalysisincludedfourcategories

representingpersonalcare(shampoo),homecare(laundrydetergent),

food(sweetbiscuits)andbeverages(cannedsoftdrinks).Premium

productsweredefinedasthosewithapriceindexof1.2orgreater

relativetothecategoryaverage.

26 GLOBAL PREMIUIMIZATION REPORT

ABOUT THE NIELSEN GLOBAL SURVEYTheNielsenGlobalPremiumizationSurveywasconductedMarch1–23,

2016,andpolledmorethan30,000onlineconsumersin63countries

throughoutAsia-Pacific,Europe,LatinAmerica,theMiddleEast/Africa

andNorthAmerica.Thesampleincludesinternetuserswhoagreedto

participateinthissurveyandhasquotasbasedonageandsexforeach

country.Itisweightedtoberepresentativeofinternetconsumersby

country.Becausethesampleisbasedonthosewhoagreedtoparticipate,

noestimatesoftheoreticalsamplingerrorcanbecalculated.However,

aprobabilitysampleofequivalentsizewouldhaveamarginoferror

of±0.6%atthegloballevel.ThisNielsensurveyisbasedonlyonthe

behaviorofrespondentswithonlineaccess.Internetpenetrationratesvary

bycountry.Nielsenusesaminimumreportingstandardof60%internet

penetrationoranonlinepopulationof10millionforsurveyinclusion.

ABOUT NIELSENNielsenHoldingsplc(NYSE:NLSN)isaglobalperformancemanagement

companythatprovidesacomprehensiveunderstandingofwhatconsumers

watchandbuy.Nielsen’sWatchsegmentprovidesmediaandadvertising

clientswithTotalAudiencemeasurementservicesforalldevicesonwhich

content—video,audioandtext—isconsumed.TheBuysegmentoffers

consumerpackagedgoodsmanufacturersandretailerstheindustry’sonly

globalviewofretailperformancemeasurement.Byintegratinginformation

fromitsWatchandBuysegmentsandotherdatasources,Nielsenalso

providesitsclientswithanalyticsthathelpimproveperformance.Nielsen,

anS&P500company,hasoperationsinover100countries,coveringmore

than90%oftheworld’spopulation.

Formoreinformation,visitwww.nielsen.com.

Copyright©2016TheNielsenCompany.Allrightsreserved.Nielsenand

theNielsenlogoaretrademarksorregisteredtrademarksofCZT/ACN

Trademarks,L.L.C.Otherproductandservicenamesaretrademarksor

registeredtrademarksoftheirrespectivecompanies.16/10628