The Value/Premium Dichotomy: Growth at Both Ends of the Spectrum

MAY 2009
EXECUTIVE OVERVIEW

IRI's Times & Trends highlights new developments and critical events across all major CPG categories and channels, providing powerful benchmarking data to help guide your strategic decisions. This issue of Times & Trends investigates the power of value and premium CPG products to drive growth at both ends of the spectrum in recessionary economic conditions.

Introduction

Change. This one word has defined the CPG industry for more than a year now. Change is omnipresent: consumer rituals, attitudes, and shopping behaviors have changed more drastically and quickly over the past year than any time in recent history.

Of course, the driver of these changes is the country’s economic climate. Recessionary conditions have left consumers seeking new ways to save money.

For example, trading down has become pervasive. Undoubtedly, value brands have played a key role in helping consumers maintain very tight fiscal budgets.

And, the home has once again become the central hub for daily living. To save money, consumers are dining at home, entertaining at home, preventing and treating ailments at home, and conducting beauty treatments at home with increased frequency. This shift has created pockets of opportunity for CPG marketers.

Adverse economic conditions are expected to linger throughout 2009 and into 2010. But, the CPG industry is well-equipped to survive, or even thrive, despite the downturn.

This report explores the power of value and premium CPG products to drive growth at both ends of the spectrum in recessionary economic conditions.

Select Findings

Despite a recessionary economy, 16% of shoppers are splurging on premium products on a regular basis. With gas prices down significantly versus 2008, consumers are once again demonstrating a willingness to travel in order to get the best deal. Value channels have demonstrated exceptional growth at the premium end of the spectrum, benefitting from an everyday low price reputation.

Innovation has played a key role in reinforcing brand equity across a range of key CPG categories. Across several key CPG categories, consumers have expressed a willingness to pay a premium in order to get a treat. Within several of these categories, innovation has successfully driven growth at the premium end of the spectrum over the past year.

See the complete report in the "The Value/Premium Dichotomy: Growth at Both Ends of the Spectrum" pdf.