In a volatile world where margins are increasingly squeezed and where drinks volume growth is, at best sluggish, and at worst non-existent, luxury (and luxury spirits in particular – growing faster than any other segment) offers a refreshing and appealing alternative. However, the luxury channel is highly competitive, with rules of engagement that sit at odds with traditional On Premise strategy, requiring in-depth understanding, targeting and tactics. So why does nobody run research in this hard-to-reach, but highly profitable opportunity?
The world of luxury drinks has been at the centre of attention recently. In the space of two weeks last November, Diageo announced the formation of its Diageo Luxury Group, Pernod Ricard announced an ‘active prioritisation’ of its premium brands and a shift towards luxury in 2025, while LMVH reshuffled the leadership team with a renewed focus on beverages.
This has coincided too with an upturn in demand for high-end experiences, with consumers turning to fewer, but better hospitality visits, on which splurging on the very best drinks is a given. In these instances, the On Premise acts as a playground for the very affluent to test, trial and savour opulent elixirs and the finest of beverages. To quote Huber de Givenchy, ‘luxury is in each detail’ and the specifics of high-end experiences matter, from the ironed tablecloth to the perfectly sculpted ice cubes and the crystal-cut glass.
However, very often that same detail that is meticulously pored over in the products is lacking in a luxury On Premise strategy. It is challenging to craft tactics for the very elite and exclusive venues, in which consumer behaviour is so rarely analysed or, even observed, for fear of interrupting what should be a unspoilt hospitality experience.
As a result, research, data and insights, on which winning strategy should be built, is hard to come by – and expensive. So, far too often, brands tend to lazily fall back on what is perceived of as the luxury consumer. Taking inspiration from the likes of high fashion, jewellery and supercars, messaging is often centred around a vague notion of an aspirational lifestyle, in the hope that something resonates and a high net-worth consumer relationship will blossom.
That may well work. The silver-haired, golden-tanned 50-something, dressed head-to-toe in designer apparel, wistfully looking out of a classic convertible to a sunset vista may well be your target consumer. They may well want to know about the exclusive casking and distillation. Or they may not. We don’t know because we’ve not done the research.
What we do know is that, for the On Premise specifically, luxury is not just the sanctum of the highest spenders. Indeed, accessible luxury is increasingly the domain of more than just the top 1%; just look at London, where the amount of five star hotel rooms has increased to over 20,000 for the first time, allowing those with slightly less deep pockets to enjoy a slice of luxury.
Meanwhile, private members clubs are booming, with soaring waiting lists and increased presence across all corners of the globe, new openings of grand cigar lounges in East Asia continue to cater for the high-end, while sporting clubs and leisure operators prioritise corporate hospitality to capitalise on demand. Perhaps then, the consumer base, alongside the opportunity, is growing – and perhaps luxury consumers aren’t all alike.
But the challenge remains. How to research a segment in which research is nigh-on impossible? My (admittedly biased) suggestion, of course, would be to invest appropriately and spend money to run high-quality research to allow you to take advantage of a high-quality (and high-margin) sector. This can be done through innovative ways of data collection, in-depth-interviews with luxury consumers or exclusive ‘taste and learn’ events, with return on investment far outweighing any initial spend on research.
However, I appreciate that is not for everyone. There is a very appealing and very worthwhile alternative; go to a luxury venue and settle yourself in with a great drink and speak with the staff. One conversation with a bartender about who they serve, what they ask for, how brands best show up and what resonates unlocks thousands of interactions with luxury consumers. Order another drink and find a different seat. Observe the consumers and watch their habits, their interactions and their occasions. Order another drink and build a winning strategy from what you’ve leant. Order a final drink and savour it – you’ve earnt it.
To learn more about CGA’s REACH survey, Bartender Insights and other sources of insights for suppliers and operators across global markets to support your global strategies, contact Charlie Mitchell here.
Originally published in Global Drinks Intel Magazine
