Premiumization: why emerging markets consumers are trading up – in 60 seconds
- Emerging markets consumers are buying more premium brands;
- Growing sales of premium coffee, liquor, cars, and cosmetics across emerging markets demonstrate how widespread this trend is;
- Incomes are growing and premium goods demand is increasing as emerging markets countries urbanize and undergo profound demographic changes;
- The structural drivers underlying premiumization are long-lasting and we see this as a long-term investible trend across emerging markets.
Old Shanghai travel guides list a food street off the Nanjing Road shopping hub, but if you go there today for a RMB 7 (USD 1.10) cup of hot soybean milk you'll be in for a surprise.
That's because the street has been demolished.
In its place, you'll find a new, 30,000 sq.ft, three-storey premium coffee roastery offering a RMB 48 (USD 7.60) Nicaraguan blend Americano, plus craft beers, store-baked breads, and augmented reality customer experiences.
And while you may balk at the change, Shanghai residents don't mind.
In fact, they're going in droves and any local will tell you about the morning queues.
And this transformation is typical of a consumer demand shift not only happening in China, but in all Emerging Markets (EM).