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Premiumization Nation: Food and Beverage Brands make Quality Investments

It’s official: the King of Pop has entered the dairy game. No, not Michael Jackson. Coke. Next year, the company will roll out its high-end milk product, Fairlife, nationwide.

So what is Coke doing entering the milk market? Milking the premiumization trend (pun fully intended). It’s a movement that’s permeating the food and beverage industry in a major way. Consumers — especially Millennial consumers — are choosing quality over convenience. Premium over standard. Artisanal over assembly line. And many are willing to pay more to get it.

Coke isn’t alone. Many of the largest companies in the world are making big investments in premium food and beverage to account for slumping sales and meet shifting consumer demand. Unilever, for example, recently acquired Talenti, a premium gelato brand that has quickly given iconic ice cream brands like Haagen Dazs a run for their money. And the premiumization trend isn’t limited to human consumers. Natural pet foods — comprising the core of the premium pet food market — are set to account for $6.6 billion in sales by the end of this year.

Other traditional food and beverage brands in direct competition with new premium up-and-comers are looking to shake the label of “not-premium” completely. For example, after two years of disappointing sales, Pizza Hut has undergone a total brand overhaul. Besides a new logo, part of the new Pizza Hut is a new menu — called The Flavor of Now — offering customers new, premium ingredients like sliced banana peppers, fresh spinach, and Peruvian cherry peppers, and new crusts like Salted Pretzel and Honey Sriracha. “This is the biggest change we’ve ever made,” Pizza Hut CMO Carrie Walsh recently told USA Today. “We’re redefining the category.”

While some brands that undergo premium transformations may be at risk of losing die-hard loyalists, the reality is, going premium may not be that much of a risk at all. Moreover, it looks to be a good investment. Consumers themselves are driving this trend, and savvy brands like Coke, Unilever, and Pizza Hut are listening. The question, then, isn’t why go premium, it’s when. And, if the trend persists, when is now.

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