The word ‘luxury’ gets tossed around quite a bit, especially in relation to opportunities for food and beverage manufacturers. But there’s a lot more involved in targeting this market than just putting your product in a pretty box.
Targeting luxury consumers requires a whole different mindset.
A real luxury brand will never say that’s what they are, at least not by using the ‘L’ word. Truly successful luxury brands are very happy to discard products in quantities that would make most manufacturers shiver and frighten their accountants silly. And in the world of luxury brands, it’s expected that the packaging will cost much, much more than the actual product.
These are strange notions to anyone in manufacturing, which traditionally focuses on reducing costs, increasing production, and getting those packaging costs way, way down.
Luxury though, isn’t about economies of scale. It’s about the clever combination of the characteristics of a brand, woven into a story created for a very particular consumer. This consumer wants to tell the world he, or she, has the impeccable taste, connections and cash to be able to buy this brand.
What may be considered waste for a premium market product manufacturer becomes a story of how the luxury brand adheres to (and can afford to have) standards way above the average. The bespoke package becomes evidence of the consumer’s rarefied status, staying on display long after the product has been consumed.
A major research project commissioned by PIRSA in 2015, led by VTT Technical Research Centre of Finland, examined the opportunities for luxury food and beverage product development in South Australia (find full reports and detailed market analyses here). The researchers developed a series of “luxury Ps” to describe the elements that come together in a true luxury brand.
What sets luxury apart is highly emotive branding leveraging these luxury Ps:
- Product craftsmanship – including handmade and personalised elements
- Product scarcity – inaccessibility is a plus, not a problem
- Pricing – never starts low with a plan to increase
- Promotional strategy – it’s about living the dream, not meeting a practical need
- Position – prime real estate in store, and everywhere else
- Pedigree – every tiny element of the brand is there to draw on and evolve the brand’s heritage and values
For more details about the Ps, read the fact sheet here. As we said before, you won’t find a truly successful luxury brand stamping “luxury” on their product or packaging. But you’ll know it is one, because these elements in the brand strategy come together to create the essential emotional and aspirational connection with the consumer that, in turn, justifies the effort, price, and pride in the purchase.
What does it all mean for South Australian food and beverage manufacturers?
Clearly, the luxury market isn’t for everybody, or it wouldn’t be the luxury market. Some product categories don’t, and shouldn’t, be looking to this market because it’s not where their consumers are. There are good opportunities at the super premium end of the luxury spectrum for South Australia, as well as at the highest levels.
However, there are very few South Australian brands (other than wine and our super premium seafood) currently positioned in the luxury market, though there are many in the premium category. Opportunities exist to build on our robust traceability and quality assurance systems for key products that are frequently counterfeited, especially where new packaging technologies can play a part in protecting the product and the brand.
So, what next?
If you are interested in learning more about the opportunities and markets for luxury products, read the market analyses and reports from the PIRSA research project on the PIRSA website here, and download the luxury and country fact sheets here.
For businesses seeking to actively grow in the luxury market, Food South Australia is presenting a pilot program on luxury food, beverage and wine marketing in conjunction with the Economic Development Board and ESSEC Business School Singapore. The program includes face to face workshops, online content and case studies and offers options to participate in a one day workshop on the fundamentals of brand management or the full Luxury Program, plus an additional Train the Trainer module.
Registrations of interest close 16 March 2018. Find out more here.