As radio sales teams sniff out advertising categories with fresh potential in 2017, a new study from Nielsen reveals that consumers are willing to trade up to premium goods in a number of everyday consumables. Rather than focusing on the likes of diamonds and champagne, many Americans are now spending more for things such as milk alternatives, headphones and toothpaste.
This Week In Consumer Electronics reports sales for electronics and major appliance dealers were up 8.5% in the period Nov. 2-Jan. 2, even though the average price was essentially flat with the prior year’s corresponding period. Sales spiked Thanksgiving-Cyber Monday with bricks-and-mortar sales up 16.1% and online sales up 15.8%.
Nielsen’s Global Premiumization Survey polled more than 30,000 online consumers in 63 countries, including the U.S. It found that electronics and clothing/shoes top the list—cited by 37% and 36%, respectively—while respondents in most regions are also willing to consider trading up for better meat or seafood.
In addition, a sizable portion of those asked were willing to pay more for dairy products. Breaking down the stats: Between 2014-16, premium milk sales grew 52%, driven by the sale of milk alternatives, such as almond milk. Sales of almond milk grew 250% between 2010-15, while the total milk market shrank by more than $1 billion.
“In many cases, successful innovation results from reimagining traditional category definitions,” explains Liana Lubel, senior VP of Nielsen Innovation Practice. “The dairy category in the U.S. was stagnant but by redefining the category to include dairy alternatives such as almond milk, brands were able to offer more premium products, and therefore bring new consumers into the category and reengage lapsed consumers.”
Personal care and beauty categories also have strong upgrade potential; more than a quarter of respondents say they’ll consider buying premium hair care (27%), body care (26%) and oral care (26%) products. In the personal category in the U.S., the premium segment now accounts for 26% of total dollar sales. And for much of 2016, more than half of sales in the shaving needs category (52%) and nearly one-third in toothpaste (32%) came from premium products.
Meanwhile, 21% of North American respondents say they’ll consider buying premium coffee or tea—and it appears to be the case. Sales of liquid coffee grew 203%, Nielsen says, while refrigerated and non-refrigerated liquid tea grew 129% and 116%, respectively, between 2014-16.
“It’s not just big-ticket items for which consumers are trading up,” Lubel says. “Many are looking for everyday items that perform better or fulfill their emotional needs or social aspirations at a price that doesn’t break the bank. This is a ripe opportunity space for mainstream brands to provide premium products that are still affordable compared to higher-tier premium services and offerings.”
By demo, 55% of Millennials say they’re highly willing to pay a premium for products that come with high quality standards, compared to 35% of Baby Boomers.