LUXURY SPIRITS OUTPACING THE COMPETITION
As an independent fabrica, DeLeón has never considered producing anything but the most pure, premium tequila possible. Unfortunately, not all distillers have the same respect for their product. Only recently have other companies have noticed what DeLeón saw all along: The people want the best.
A recent Financial Times article showed that consumers around the world are passing on lesser-quality spirits in favor of premium luxury brands. Diageo, the world’s largest distiller, has announced that its ultra premium brands are their fastest growing and that they are reducing investment on their second-tier brands, which have become less profitable.
See an excerpt from the article below:
Diageo chief focuses on premium brands
US consumers are trading up to premium liquor, in spite of anxiety about a tepid economy, as they look to lift their spirits with affordable luxuries.
Executives at Diageo, the world’s largest distiller by revenues, said at its investor conference that its “ultra premium” brands were growing the fastest and that it is paring back investment on “value” brands, which have become less profitable.
“Even in theses difficult economic times, we continue to see growth in that portfolio in double digits,” said Paul Walsh, Diageo’s chief executive, of the company’s luxury brands. “We lose sight of the fact that there are individuals out there who want the best and money is no object.”
But the “premiumisation” trend goes beyond the super-rich, with middle-class tipplers buying more expensive brands of alcohol rather than trading down to beer. Other food and beverage companies have also sought to capitalise on consumers’ continued willingness to indulge themselves with upmarket treats.
With sales of its most expensive brands up 30 per cent from a year ago, Diageo is cutting spending on its value offerings and sacrificing sales volume for those brands. Meanwhile, the company has been raising prices on its luxury drinks to preserve the “huge status cues” and emotional ties that link customers to those brands.
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Source: Financial Times
By Alan Rappeport in New York