Aurora Magazine

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How premium is your brand?

Published in May-Jun 2019

As premium-priced products gain traction in Pakistan, let's explore the dynamics behind this trend.

When doing product or market analysis, we often come across the term premiumisation. Before going into the detailed dynamics of the trends encompassing premium-priced products in Pakistan, it is important to understand the meaning of premiumisation. Simply put, it is the action or process of making a brand or product appeal to consumers by emphasising its superior quality and exclusivity.

Globally, the premium-priced segment is outpacing mass market growth and a number of factors are driving this trend. When we look at emotional factors, studies reveal that consumers are willing to spend more on luxury items, if they also have the potential benefit of improving social or environmental aspects. Typically, these are products that taste good, make them feel good, give them confidence and fulfil their status and personal self-esteem needs.

Nielsen’s Global Premiumization Report 2018 highlighted the fact that the tangible product attributes associated with the term are considered to be more important than the emotional aspects. Globally, quality (of material and ingredients) is the top-ranked attribute consumers associate with premium-priced products, followed by superior functionality/performance and then by superior design/style. Globally, Nielsen defines the premium price segment as “goods that cost at least 20% or more than the category’s average price.”

Interestingly, there are varied responses towards these different attributes across countries. In Pakistan, quality of material and ingredients tops the ranking. However, the second most attributed criteria are brand awareness and trust which rank fourth globally. Another interesting fact is that appetite for premium-priced products in Pakistan has increased over the last couple of years, even if accessibility to these products is still a challenge.

Delving deeper into these dynamics, Nielsen Pakistan analysed 44 FMCG categories and found that in Pakistan, premiumisation is a growing phenomenon and is exhibiting significant opportunities in terms of size and growth. The premium-priced segment is worth approximately Rs 215 billion and accounts for about a third of the FMCG market. Growth has remained stable if we compare the data from recent consecutive years (2016 vs. 2017). Furthermore, the size of this segment is evenly spread and about two-thirds of the categories showed a sizable premium-price segment (greater than or equal to 10% share in the respective category).

Nielsen further shortlisted 21 categories out of the 44, where the premium-price segment is growing at a higher rate compared to the non-premium segment. These findings showed that the premium-price segment grew by 12% in these 21 categories against 10% growth in the non-premium-price segment. It further highlighted that there is a clear acceptability of this segment among Pakistani consumers.

However, the key question is how to tap into this lucrative segment. There are five key levers which are helping the growth of the premium-price segment in the Pakistani market.

Growing reach and visibility

Although it may seem obvious that increasing distribution is the answer, there are underlying factors that need to be taken into account. Companies have to reach new audiences, expand their distribution and ensure that their distribution network carries the entire portfolio range for that specific segment. This can be achieved either by increasing current distribution as well as in-store visibility (acquiring shelf space or adding new assortments). However, premium-priced products cannot be expected to reach the same level of distribution as non-premium products. In most cases, we see that distribution remains at 50% of the non-premium segment, simply because we cannot expect mass market appeal for premium-priced products.

Growth in rate of sales

In this regard, factors such as better in-store visibility, greater consumer pull/appeal, frequent purchases/more buying occasions or the incremental weight of purchase contributes to an increased sales rate from the existing distribution network.

Increased pricing

Although premium price products can be tagged freely, in the majority of successful cases, the price is limited to approximately double of that particular category’s average price. For instance, if a category has an average price of Rs 100, the price range of premium products will be set between Rs 120-200 in most successful cases. Moreover, the prices of existing products in a portfolio can be increased, but the increase should be supplemented by clear communication regarding product benefits to justify it.

Pack format and size mix

Although these cases are very limited, in general, this helps achieve increased value sales but may have a negative impact on volume sales and brand loyalty.


This plays a vital role in premium-price segment’s growth. We have seen how a number of new launches in the premium-price segment in Pakistan have achieved a fair level of distribution during that particular launch year.

Nielsen has identified key take-outs which can help manufacturers and retailers to either increase or make their presence much more effective in the premium-price segment.

Despite the changing economic scenario and market dynamics, we see premiumisation retaining its hold in the Pakistani market. Although consumers are attracted to premium-priced products due to a combination of emotional factors and tangible product attributes, there is a strategic side to it as well. This originates from businesses’ assessment of how to launch new premium-priced products or market their existing ones by adopting a holistic approach which takes into account factors that are not just limited to regular product marketing.

Asfand Aslam is Associate Director, Retail Measurement Services (RMS), Nielsen Pakistan.