Rethinking luxury: pricing strategies and market trends
“That phrase of ‘it’s too expensive’, the minute you’re getting into that conversation, you’re kind of in trouble,” cautioned Tom Bojarski-Hobbs, business development director, Palmaráe Gin.
Bojarski-Hobbs was speaking to The Spirits Business alongside Alessandro Mansueto, brand manager at Król Luxury Organic Vodka, about pricing strategies, consumer value and market trends relating to the evolving world of luxury spirits.
While luxury has evolved beyond a product’s price, there is no shying away from the fact it is still an important part of the luxury space.
With prices continuing to rise across the supply chain, how can brands balance costs and premiumisation? Is it inevitable things will continue getting more expensive for consumers?
“For consumers, it’s got to be worth it. That phrase of ‘it’s too expensive’, the minute you’re getting into that conversation, you’re kind of in trouble,” said Bojarski-Hobbs. “You’re always going to get challenged on price. We’re seeing that in hospitality too.
“The cost of everything, like a pint of beer, if you go for a round with a few mates, it can be expensive.
“But that plays into the more mindful choices of when to go out and socialise, and then we’ve got to understand that if that’s the psychology of consumers, they’re really going to be thinking about when they’re going out, what they’re going to do, where they’re going. And then the brand moment that plays a part in that is really important.”
Mansueto added: “Luxury brands need to be very considered about their price because you can get it wrong if suddenly your price leaps and you’re not providing the transparency, the experience, the authenticity to justify a price point.”
ABV was also cited as another more traditional indication of luxury in the spirits space.
Bojarski-Hobbs added: “It’s definitely evolved from there now and with consumers becoming so dialled in and the benefit of having [mobile phones] in our hands, we can understand so much deeper [the] knowledge that exists outside of maybe a conventional training or engagement with a bartender.
“Authenticity, storytelling and experience is fundamental to making sure that you can deliver a luxury product. It’s really interesting to see how that space has changed and the different values that are being brought into the luxury space.”
Luxury across the supply chain
The duo also noted how the perception of luxury is something that trickles down throughout your supply chain; it is not just limited to the bottle and brand itself.
Selecting the right distribution partners who align with your brand’s values should also be carefully considered, as well as working with outlets where “there’s a real meaningful rate of sale, meaningful engagement, as opposed to just a blanket-wide distribution model”, Bojarski-Hobbs noted.
With a clear demand from consumers and trade for experiences that enhance the overall drinking occasion, brands cannot risk resting on their laurels when it comes to innovation – even, perhaps especially, in tough trading environments.
Mansueto shared: “Adding creativity [to your brand], evolution in packaging, great packaging collaborations with third parties, which could be retailers, wellness facilities, is important. We do this a lot especially for our clients as a reward scheme or incentives.”
The full conversation with Mansueto and Bojarski-Hobbs is available to watch via the link below and on The Spirits Business’ YouTube channel.
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