Saturday, November 8, 2008

Premium Choices

Blink:
Despite the roller coaster economy we are experiencing this year, the rise of the luxury market in the next decade will breed an “elitist” consumer who will pay premium dollars for a status experience. Consequently menuing will change to target these consumers.

Read On:
A wine lovers package at the Hilton Arc De Triomphe in Paris starting at 290 Euros per night (the equivalent of $375 at today’s exchange rate) complete with two tickets to the Paris Wine Museum and a wine tasting. Don’t forget to add in airfare and transportation to and from the hotel if you are only planning on spending one night in Paris. Sounds like a bargain for the individual who recently paid $34,350 for Lot 87, Chateau Lafite Rothschild 1982 in its original wooden case at Zachy’s (
http://www.zachys.com/retail/) inaugural Hong Kong auction. Here in Philadelphia, the Cheese Steak capital of the World, you can get a $100 Kobe Beef Cheese steak. A little too rich for your tastes? How about something simple like candy? Mars Inc. just jumped into the $2 billion plus premium chocolate market and introduced Premium M&M’s. “A little luxury with each bite,” according to their spokesperson Eva Longoria Parker. The six-ounce package retails for $3.99. I still hope they melt in your mouth, not your hands: (http://www.mms.com/us/)

Despite all the economic turmoil we have been experiencing, the market for luxury goods continues to grow in leaps and bounds. By the year 2012 it is expected to exceed $450 billion in Global sales. Who is fueling this affluent consumption boom? The “elitist” consumer, individuals who seek to buy premium products/services thanks to the experience factor, but also as a status symbol to flaunt their new wealth. Some market researchers believe the core of these consumers is the emerging “middle-class millionaires” – people who have total assets (hopefully real assets) between $1 million and $5 million.

How is this currently impacting the foodservice industry? As I stated earlier in this post, exotic white tablecloth experiences are surfacing as I write. Dining in the dark at Opaque in California where patrons definitely don’t have to worry about watching their calories since they are unable to read any calorie postings. Don’t forget to make a reservation at Masa, the 26-seat sushi bar in Manhattan for a $300 per person sushi dinner. Not ready for an over the top eating experience? Maybe you just want to settle for a premium cocktail – try the $3,000 Sapphire Martini at Mezz, the “ultralounge” at the Foxwoods Resort Casino in Connecticut, complete with a sterling silver pick holding a pair of platinum-mounted diamond and sapphire earrings.
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Sound outrageous? Definitely, but look for this trend to continue, not just for the emerging “middle-class millionaires” that frequent fine dining establishments, but also for mainstream consumers whose profligate spending behavior will lessen their probability of making logical versus image choices. In foodservice, menuing will change as follows:

1.) More specialty menus in a majority of all commercial segments with QSR being the exception, will be utilized for premium beverages (everything from alcohol to signature coffees, teas or hot chocolates), desserts made with exotic ingredients, etc.

2.) Branding the source of origin for proteins including sustainable seafood, will command premium prices for entrees, a trend pioneered by Bill Niman and Orville Schell with their nationally recognized brand, Niman Ranch. They publicized how their animals were raised under humane conditions, all the ways from their feed to the time they were dispatched: (
http://www.nimanranch.com/index.aspx).

3.) Operators, in response to the economy will realize that price and value are two different concepts. Price is simple; it is the amount of money a patron is willing to pay for a meal. Value is dependent on price, but far more complicated in that it also takes into account subjective criteria like tastes and preferences that equate to experience. As a result, more priced fixed or special tasting menus will evolve that will deliver the status experience being sought out by “elitist” consumers.

Premium choices will become the badge for the 21st century consumer. Consumers everywhere will be motivated by status brands and symbols. This is a good time for foodservice operators to jump on the bandwagon.

1 comment:

  1. Great minds steal from the same place, Jimmy. Reference my TPMusings from last month "Premiumization" http://blogs.foodserviceu.com/tpmusings/archive/2008/09/16/premiumization.aspx
    There's GOLD in them thar "premium hills". Don't overlook it.

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