Jo Gilbert’s London Wine Fair panel discussion set out to explore whether premiumisation still resonates in an increasingly challenging market. It ended up revealing a more complicated relationship between sustainability, profitability and consumer spending

For years, sustainability and premiumisation have often been treated as natural bedfellows, the assumption being that lightweight bottles, regenerative/organic agriculture and carbon reduction programmes could all eventually be leveraged by corporate marketing machines to justify higher price points.

However, this assumption was put under the microscope at Drinks Retailing’s panel discussion on premiumisation during May’s London Wine Fair. The panel, which included Andrew Pattison, category buying manager for wine at Tesco, and Eilidh Robertson, senior consulting manager at IWSR, was quizzed on whether it is blue-sky thinking to assume that environmental agendas and economic profitability go hand in hand.

“We need to separate the two,” Pattison said. “I don’t think we can say ‘sustainability is premium’. For me, sustainability is about the long term and being aggressively focused on doing the right thing. Provenance, rarity and heritage are separate, but are absolutely a brilliant part of what premiumisation should be.”

Sustainability becoming a baseline expectation rather than a premium differentiator is certainly not a new concept in drinks. However, it highlights how far the dial has moved. Ten years ago, environmental initiatives could often be marketed as nice, valued, extra or add-on, whereas today, they are increasingly viewed as part of the minimum standard.

Robertson backed this up. Referring to consumer data, she said: “People don’t pick sustainability as a key driver to purchase. The top one is grape variety.” However, sustainability still plays a role once consumers have narrowed down their choices. “If you’ve already decided to spend the money and one [option] is sustainable, people pick the sustainable one,” Robertson explained.

Of course, the issue of whether environmental sustainability is enough of a driver to encourage consumers to trade up doesn’t exist in a vacuum. It is forced to rub shoulders with an increasingly cautious consumer landscape. Meanwhile, rising production costs, climate challenges and ongoing inflation mean businesses must balance environmental ambitions with commercial realities.

Part of the problem is that consumers often struggle to recognise or understand the value behind those investments. Panellists repeatedly returned to this topic more broadly by pointing out that consumers are increasingly opting to reserve their spend for experiences or ‘moments’ that create an immediate emotional reward, rather than products.

Herchelle Perez Terrado, beverage trading manager at Harrods, poignantly shared that when she was a
spirits buyer at Waitrose, “premiumisation was akin to craft, provenance and heritage. Now, it has evolved
into experience”.

Tom Khan-Lavin, chief executive of creative agency Yes More, offered a slightly different perspective. He agreed that sustainability alone is unlikely to justify higher prices, though values increasingly shape how some consumers define premium products. “Premiumisation is contextual. A treat for me is different to a treat for you,” he said.

Ultimately, he believes that what resonates is authenticity. By way of example, he offered up his experience working with a Kenyan agave producer that makes its spirit from what is essentially a waste product. In Mexico, agave producers typically use the plant’s heart (piña) and discard the fibres. In Kenya, there is an existing sisal industry that uses the fibres and discards the heart. This producer is taking those otherwise discarded hearts and turning them into an agave spirit.

“The audience has a bullshit detector,” Khan-Lavin said. “We have to have tunnel vision on the key thing that stands out.”

Challenges in sustainable wine

Another interesting point to emerge was the fact that the wine category already benefits from a perception of ‘naturalness’.

Unlike some other goods sectors, many consumers assume that wine is inherently environmentally friendly. On the one hand, this creates a beneficial halo effect for the category. On the other, it poses communication challenges as some brands struggle to differentiate themselves from others.
“I think there’s sometimes a bit of a disconnect here with wine,” Roberston said.

This is particularly relevant for producers investing heavily in organic, biodynamic or regenerative
practices. These initiatives may deliver environmental benefits, but what if consumers struggle to understand the difference – or to see a meaningful difference inside the bottle?

Another LWF session further brought these strands together. Hosted by NIQ, it highlighted how traditional premiumisation models are being reshaped by moderation, changing occasions and a younger generation of consumers that is engaging with wine in different ways to its predecessors.

NIQ stressed that online retail represents one of the strongest growth opportunities for wine brands, with pure-play online channels (no bricks-and-mortar presence) growing by almost 20% year on year.
Younger online shoppers are still under-indexing in still wine purchases, but the space presents an opportunity for engagement via simpler education and stronger digital targeting.

Could this be a place where sustainability messages cut through? Maybe. Ultimately, the major challenge is clinching what the advertising industry calls ‘share of voice’. This is the case for any alcohol category, let alone solely premium or sustainable brands.

As former head of trading for beers, wines, spirits & soft drinks at Waitrose, Pierpaolo Petrassi MW, said in his recent exit interview with Drinks Retailing: “Today’s shopper isn’t just choosing between one bottle and another. You’re competing with household budgets, children’s activities and Netflix.”

In order to cut through, “consumers need to feel value across whatever price point they’re spending on”, Robertson added.

In the end, it seems that premiumisation has not disappeared; it has just become more selective.
The challenge is particularly acute in wine. Faced with declining consumption, changing drinking habits
and growing competition for overall household expenditure, the category needs to communicate why
its products matter.

That could be through quality, provenance, experience or a strong sustainability story. In the end, it needs a compelling reason to justify that higher spend, by resonating with consumers’ lifestyles and values.