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How Those Who Know, Define What Premium Means

Highlights and key takeaways from the expert panel discussion at A.C.T. Seattle 2016

wine and cheesWhat does it mean when you say a food or beverage product is premium?

This was the question at the heart of a thought-provoking expert panel discussion at The Hartman Group’s A.C.T. Deep Dive Into the Premium Food & Beverage Marketplace symposium this past September in Seattle.

For the panel, we assembled a group of leading food culture innovators and influencers representing some of the area’s great brands for a discussion to hone in on what today’s “premium” looks, smells, tastes and feels like. What they had to say may surprise you. It did us.

Panelists included:

  • Kurt Beecher Dammeier, CEO, Sugar Mountain Capital. Kurt is the owner and chef of a number of food destinations including Beecher’s Handmade Cheese, Bennett’s, Liam’s, Maximus/Minimus and The Butcher’s Table. With each operation, Kurt’s goal is to demonstrate how quality ingredients make for delicious meals.
  • Debra Music, Co-Founder and CMO of Theo Chocolate. Debra’s extensive experience as a strategic brand and cause-related marketing consultant has helped Theo become the fastest-growing brand in its category (natural and organic chocolate) nationally.
  • BreeAnna Marchitto, Vice President of Marketing, DRY Soda Co. BreeAnna has contributed to the brand’s current triple-digit annual revenue growth trend.
  • Bill Weymer, President & CEO, Town & Country Markets, Inc. Town & Country operates six markets in the Puget Sound area, including The Ballard Market and Central Markets.

The session was moderated by Stas Shectman, Ph.D., a senior ethnographic analyst at The Hartman Group. Following are comments excerpted from a lively and thought-provoking one-hour discussion with the people who bring premium to life — and to the market every day.

Q. What does “premium” mean, what does it look like, how does your brand express premium trends?

act Seattle panel
Marchitto: For DRY, it definitely starts with finding the most premium and simple ingredients available and optimizing for taste above all else. Then it comes down to the brand aesthetic and being sure that we're offering something more like an experience to the customer versus just solving a need state.

Dammeier: Premium is about the product quality and about the transparency to kind of the soul of the company. That's what we are really trying to deliver to the market. We don't really ever use the word premium. It seems like more of a CPG word, but the idea of it as a great product along with full transparency about how it's made, why it's made and the values of the people who are making it.

Music: I'll echo what Kurt said, which is that at Theo we don't talk about premium either. What we talk about is the integrity of our brand. We talk about our values, which include full transparency in our supply chain, and then we talk about the highest product quality and how we can achieve those things. We also talk a lot about how we can add value to not only the category that we're in but the world that we live in and all share, so it's interesting to watch trends in the marketplace.

Weymer: This is going to sound like a trend, but we don't like to call ourselves a premium operator or a premium retailer. My sense is there's some baggage around this idea of premium. For us, the way we look at it is we want to enhance the eating experience of our customers. That’s what we focus on, and it brings us meaning and purpose. Because we sell all these products and they're great companies; I went to their websites and I read their stories. Every one of them has a story about great food. They were inspired about producing great food for a great cause, whatever it may be, so there's something about premium being a product with a higher purpose or a higher calling.

Q. What is the most important, most challenging business variable that today’s market changes has presented? How have you guys thought about dealing with it?

Music: When we first started, which was ten years ago, we were the first organic fair trade-certified bean-to-bar chocolate factory, and so the challenge at that point in time to some degree was to educate people about what that meant, because consumers for the most part didn't understand the distinction between a chocolatier and a chocolate maker. We had this big message about vertical integration, supply chain and where cocoa actually comes from, the social and environmental ramifications, and at the same time if you want people to listen to what you have to say about those things, you have to make great product that they're going to love and want to eat more than once. Those things really worked for us early on in addition to a go-to-market strategy that had a lot to do with sort of being disruptive. Not only disruptive to the cocoa industry because of our ethos but disruptive in terms of the products we offered.act Minneapolis promo

Marchitto: Being kind of first in your category or first in the subcategory presents a very unique set of challenges. DRY officially launched in 2005 with lavender, kumquat, lemongrass and rhubarb soda. At that point in time, ten years ago, there were loads of people who had never thought of tasting lavender. It was something that they thought maybe went in their bath water. People would tell us that. Fast forward ten years and I think foodie culture has really caught up with the concept behind DRY and this idea of clean ingredients and kind of a simple promise and, of course, transparency. People understand us more than ever now, and lavender is now our fastest-growing SKU and our best seller.

Q. How do you make premium everyday and how do you think about the kinds of occasions for your products, where they fit into consumers’ lives?

Dammeier: The premium categories all start out with the idea that there's been consolidation in the main category, and consolidation takes away variation. It opens up the playing field to people who come out with something that's different, and they can capture more money by doing it.

Music: When we first started, we were really ambitious and in the spirit of wanting to be disruptive in what was at that point in time a very lifeless category which has been on the same trajectory, I like to say, over the last ten years that coffee was on in the 80s. Where the idea of terroir and cocoa as an agricultural fruit and all that stuff, people know way more about that now than they did when we started.

Q. There's a fascinating kind of flip side to this. You're talking about immersing yourself in your categories. Really kind of getting to know the taste and the look and the feel of what's going on there. Then, there's the perspective of the retailers who are carrying all of these products and how retailers have to think about merchandising them and developing partnerships to work with producers.

Dammeier: I was watching earlier and thinking about if I was a CPG company how I would overcome the lack of passion. I mean this is just passion sitting here, right? We are doing this, it's right here, and if you're a CPG who's buying a brand looking for a ROI, I was just trying to figure out, if I was one of those people, how I would overcome that. I don’t know how you do it.

Weymer: That's a huge point you just made. I think that companies that can't overcome that are the ones that start sliding down the life cycle. Somebody in the organization has got to have that purpose, that driven passion for that product and to stay focused. We have a principle in our company and it's called setting the table. It has to do with how we merchandise. The real core of that principle is to inspire.

FOOD FOR THOUGHT—KEY TAKEAWAYS

Consumers will increasingly bring premium into their households and premium will continue to evolve in meaning. Marketers should pay attention to which products are showing growth in the natural and specialty channels and ask: what attributes do they have that will mainstream in the next two to three years? Look to other categories for inspiration as well.

Staying on top of what premium means will be essential.

  • Understand how consumers interpret premium via attributes, ingredients, packaging, location in store, etc.
  • Invest in premium strategically as some premium categories will evolve more quickly than others.
  • Categories in which health is a key usage driver will move faster.
  • The acceleration of premium puts retailers and QSRs in more direct competition than ever before.
  • Refrigerated packaged premium products offer the most white space opportunities moving ahead.

Categories

Food & Beverage Occasions Consumer Package Goods Culture Private Label and National Brands Retail/Shopper Insights Point Of View


FOOD SHOPPING IN AMERICA 2017

As leaders in the study of American food culture, The Hartman Group has been tracking how Americans shop for food since the 1990s. From one-stop shopping to multichannel shopping to online markets and click-and-collect, we continue to track consumers’ evolving perceptions, needs, habits and relationships with food retailers. New to the 2017 report is a special section on the expansion of the discount grocery channel, the emerging fresh-format channel and smaller-footprint retail formats.

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