A new wave of consumerism is sweeping the world, and it's all about ‘premiumization’. Forget bargain hunting; shoppers are increasingly seeking out higher-quality, more luxurious goods and experiences, even if it means paying a premium. This shift is reshaping industries from fashion and food to travel and technology.

In fact, various research reports and market analyses have highlighted this trend. McKinsey & Company’s latest consumer survey revealed that a growing number of consumers, particularly in emerging markets, are showing a willingness to ‘trade up’ to premium products. In India, for instance, the first half of 2024 witnessed a significant increase in demand for premium goods, indicating a change in consumer mindset towards aspirational and quality-driven consumption. GfK's report on the Indian technical consumer goods market further corroborates this trend, highlighting a pronounced preference for premium products, leading to substantial value growth in the sector.

‘Premiumization’ as a trend

Premiumization is more than just buying expensive things. It's a mindset shift where consumers prioritize value, quality, and exclusivity over simply getting the lowest price. Research from Euromonitor International highlights that this trend is driven by factors like rising disposable incomes where a growing global middle class with more spending power is pushing up demand for premium products.

Growing desire for experiences; consumers are willing to invest in products and services that enhance their lifestyle and well-being. Status seeking and self-expression is another factor, as premium products often act as status symbols and allow for personal expression. Moreover consumers are drawn to established brands with a reputation for quality and craftsmanship.

China, India leading the change

While premiumization is a global phenomenon, certain regions and demographics are at the forefront of this trend. Fast growing economies like India and China, with their rapidly expanding middle class and increasing disposable incomes, are witnessing a notable growth in premium consumption. In developed economies, despite lingering economic challenges, a significant portion of consumers continue to gravitate towards premium offerings, indicating a persistent desire for quality and exclusivity. Consumers in the US and Canada are showing a preference for premium offerings in sectors like food and beverages, personal care, and home furnishings. Europeans are are seeing premiumization grow in sustainable fashion, organic food, and wellness services.

Affects of changing demographics

The demographics of premiumization are also undergoing a transformation. Traditionally associated with older, affluent consumers, premium consumption is now gaining traction among younger demographics. Millennials and Gen Z, in particular, are increasingly drawn to premium brands and experiences, driven by factors such as social media influence, the desire for self-expression, and a heightened emphasis on quality and sustainability. Similarly baby boomers with significant disposable income are also embracing premiumization, seeking products that offer comfort, convenience, and health benefits.

The fashion and apparel sector is at the forefront of the premiumization trend. Statista studies show the global luxury fashion market is expected to reach $430 billion by 2025. This growth is being led by a demand for high-quality materials and craftsmanship as consumers are willing to pay more for garments made with durable, sustainable, and ethically sourced materials. In fact, a survey by McKinsey & Company found 60 per cent of fashion consumers are willing to pay more for sustainable products.

The desire for unique and personalized styles is another catalyst as premium brands offer exclusive designs and customization options that cater to individual preferences. Increased focus on brand storytelling and heritage with consumers being drawn to brands with a strong history and authentic narrative.

In terms of segments, premiumization is impacting all segments of fashion Men are increasingly investing in premium suits, shoes, and accessories, seeking both style and quality. Women’s segment is seeing demand for luxury handbags, designer dresses, and high-end activewear growing. Even children's clothing is seeing a premiumization trend, with parents opting for organic fabrics, sustainable brands, and designer labels.

Premiumization therefore is a powerful trend that is transforming consumer behavior across the globe. As consumers become more discerning and prioritize value over price, businesses that can deliver high-quality, unique, and meaningful experiences will be well-positioned to thrive in this new era of consumption.