Spirited co-editor Justin Choo posits how premiumisation in the world of wine and spirits is bringing out the best of what we have.
Premiumisation, depending on who you ask, can be a good or bad thing. Defined as the process of making a brand or product — in this case we’re specifically talking about wines, whiskies, and other libations — appeal to consumers by emphasising superior quality and exclusivity, premiumisation can make you feel special about drinking your favourite tipple.
On the other hand, premiumisation also almost always drives prices up and supply down, which means actually getting your hands on that bottle can be just that little bit harder.
Indeed, the word ‘premiumisation’ can get quite the bad rep. It may suggest selling a bottle that’s far more expensive than its worth, only because there are enough rabid fans who are willing to get their hands on a producer’s every output no matter what the cost. But the fact is that this is an inevitable evolution of any category experiencing explosive growth that far outweighs its capacity to produce.
Japanese whisky in the past decade, for example. Or vintage Scotch, particularly from the ’60s and ’70s. Throw in some prestigious Burgundy Grand Crus, as well as various top Bordeaux First Growths. Not to mention Champagne.
Definitely Champagne.
Premiumisation – a sign of the times.
Premiumisation signifies more than a trend; it’s a paradigm shift in consumer behaviour and market dynamics. This movement isn’t merely about higher prices either. It’s about elevating consumers’ awareness and compulsion to surge forth in their personal journey, borne of an intrinsic desire to drink ‘better’.
Today, this is a surefire indication of a mature market; filled with droves of enthusiasts, hobbyists and connoisseurs from all walks of life, united by an ennui of ‘been there, done that’.
True connoisseurs seek products that offer something beyond the conventional — be it in terms of heritage, craftsmanship, or exclusivity. The mark of a truly premium bottle is the resilience of its resale prices, even in harsh, fluctuating economic landscapes. Therein also lies the appeal of ‘premium’ bottles: some will enjoy leveraging their experience to separate the wheat from the chaff, others will simply bask in the exclusivity of the given experience, while the ‘sensible’ see it as a fun way to diversify their ‘assets’. It is a rather fascinating situation, as we consume far more quickly than any vineyard or distillery can produce.
Either way, you get to pick your wins.
On the other side of the fence, what that translates to producers is a need to provide better quality, storytelling, and elevating the consumer experience.
The reality: Premiumisation is inevitable.
Wines have long been associated with fine living; one could say that wines long led the way in what premiumisation looked like. The concept of en primeur has been around long before, in the 18th century, as a way for vineyards to stabilise their cash flow, and at the same time, wine lovers can secure their prized favourites, even if it means having to wait a couple of years to do so.
But it’s arguably through Scotch and Japanese whisky that the world learned how spirits could be commodities. Whisky is, by virtue of mindshare, still the benchmark for quality (think in terms of how well it is regulated) and prestige in the spirits world. The whisky explosion, especially in the rise of Japanese whisky, set a then-unfathomable precedent for what consumers are willing to pay for perceived value — far more than you think.
For a time, the industry fought hard against ageism — age doth not maketh a good spirit —that helped to normalise non-age statement spirits, which understandably you would assume was cheaper to produce. Even so, opulent limited editions found their way into this supposedly modest category. The Macallan’s M Collection, for example, or Yamazaki’s Tsukuriwake Selection.
Swings and roundabouts I suppose.
Ultimately, both limited editions and age statements have become symbols of desirability in the world of whisky, driving consumer interest and a willingness to pay. Our collective perception of value has certainly evolved.
The rise of craft.
Yet those who are worried about the over-commercialising of their favourite tipples need not to be too concerned. All things will balance out eventually; in this case, it comes in the form of craft producers.
These are usually small independent distilleries or wineries often start as passion projects from fans eager to produce high-quality products that they think are missing in the current market. Unencumbered by the weight of tradition (unless they intended to double down on that), these new craft producers often bring innovative ideas to the table that are, of course, pretty much necessary to stand out in an overcrowded market.
These new craft offerings frequently carry a premium; one would argue that had the market not been willing to accept higher prices, these foundlings would never have seen the light of day.
Take American whiskey. Examples like Kings County Distillery in Brooklyn, New York, Portland, Oregon’s Westward Whiskey, and Westland Distillery in Seattle illustrate how craft producers have influenced the market with their distinctive approach to whiskey production.
While there is an implied distinction between American whiskey and bourbon and rye, the traditional spirits cannot be any different. The popularity of cult names like Pappy van Winkle, Blanton’s and Buffalo Trace, just to name a few, helped to drive the premium bourbon segment to new heights.
But the likes of Kings County and Westland could not be more different in approach — with a clean slate and a fresh canvas, the American wave is unfettered by tradition and is all the better for it. Taking the road less travelled, such as using unconventional wood casks, e.g. Garryana oak or exchanging casks with the craft beer breweries to leave their unique stamp on each others’ products.
It’s not a situation that’s unique to the United States. The global whisk(e)y scene is as diverse as it is dynamic. Traditional spirits or styles will lean into their heritage, such as Irish whiskey Redbreast or the Japanese Suntory and Nikka brands like Yamazaki and Yoichi, while ‘New World’ names like Glann Ar Mor from France, Japan’s Chichibu, or Paul John from India unabashedly drive their unique qualities have contributed significantly in shaping consumer behaviour and market prices, for precisely the same reasons.
The long and the short of it is that it’s impossible not to ‘premiumise’ your product. The competition is too stiff, and it makes the difference which shelf your product goes to — top shelf, or bargain bin.
If you want to be cynical about it, it doesn’t mean that the liquid is any better; it’s a battle of who understands their customers better and gives them what they want.
Mezcal and Tequila — A new frontier.
While it’s unfortunate that Tequila was the ipecac of many a generation for a time, its image has changed considerably. Tequila and Mezcal are now some of the hottest tipples in the market today. Their shift from a vomit-inducing staple of misspent youth to a premium spirit is one of the most notable transformations in the spirits industry, as the wider world is now aware of the joys of artisanal agave spirits.
The numbers bear out. Tequila achieved both record production and export results for five years running leading up to 2022, according the the Mexican government and Tequila’s regulatory body, Consejo Regulador del Tequila.
Then there’s Mezcal, Tequila’s more rustic cousin. Mezcal, with its more unfancied roots and eclectic styles, is arguably the bigger star, at least amongst agave connoisseurs. In 2022, Mexico exported 8.54 million litres of mezcal worldwide, a 67% increase over the previous year.
The diversity of agave uses, along with its distinct smoky profile, sits well with whisky connoisseurs who are often on the lookout for new experiences, which Mezcal has in spades. They range from more ‘newcomer-friendly’ brands like Codigo to the outright adventurous like the traditional Pechuga from Bosscal (which includes the use of a skinless rabbit in its distillation).
Yet even the agave category, however humble its origins, is not spared from the progress of premiumisation. Just consider the Volcan X.A Tequila, an ultra-premium product from Volcan de mi Tierra heftily promoted by luxury juggernaut LVMH.
Ordinarily, you’d think that this is pretty much jumping the shark. Still, premiumisation works also because its audience has become more knowledgeable. It’s knowledge — or storytelling, to some extent — that is an integral part of the tasting experience.
Not premiumisation for premiumisation’s sake.
On top of craftsmanship, authenticity is probably one the most important traits to have; another way of putting it — don’t be who you are not, and don’t put out products that don’t ‘make sense’ to your identity. It’s a key part of any storytelling efforts. Exhibits A, B, C, etc., if you will.
For some categories, like gin for example, you don’t have a choice. The gin market has been revitalised by the craft movement, with distilleries exploring a vast array of botanicals and flavours to keep pace with the craft cocktail movement.
The premiumisation of the gin category is a little more subtle in the sense that you’re not going to get as many fancy limited editions and collectables compared to whisky — these are made for drinking and mixing. The more developed the cocktail scene, the more likely that bartenders become more discerning about the gins they use.
In this context, provenance, terroir; these attributes are most relevant and have crept into gin parlance, and weaved their way into the long-storied history of gin.
While the classic juniper-forward style is still respected, individuality is celebrated more readily these days. Supported by a watertight ‘why?’, this is often a marker of a premium offering, combining exotic recipes with the use of more unusual ingredients to deliver a unique sensory experience. The savoury seaweed-infused gin of Quebec’s Distillerie du St. Laurent, for example, or New Delhi’s Hapusa Gin, which leverages on wild indigenous juniper foraged from across the snow line of the Himalayan mountains that is combined with other botanicals – such as mango, Gondhoraj lime, and turmeric — sourced from around India.
Premiumisation in Asia.
Asia, in particular, is in the grip of wines and spirits premiumisation. We’ve seen how brands have, in recent years, dropped exclusive releases in this part of the world aimed at extending badge value.
The most obvious examples? Whisky brands and cognac houses dropping Chinese New Year releases that tap on the region’s penchant for indulgence during that festive period. A recent example here is Hennessy, which sees the maison collaborate with Chinese artist Yang Yongliang for a Chinese New Year collection to usher in this year’s Year of the Dragon. Then there’s Chivas Regal, the Pernod Ricard-owned blended Scotch whisky brand tapping K-pop sensation LISA of Blackpink to introduce Scotch drinking to a whole new generation here in Asia.
And in the recently released ProWein Business Report 2023, it ventured that premium wines are expected to continue to do well in Asia this year. Even as the rest of the world trend towards value wines. Consider the ‘Jewels of the New World’, a collection of fine wines from Concha y Toro aimed specifically at Asia.
In fact we’re expecting to see region exclusives, limited editions and other special releases for Asia at ProWine Singapore, ProWine Hong Kong and ProWine Shanghai when those shows come to our part of the world later this year.
The beauty of value? It’s in the eye of the beholder.
The market now values quality as much as quantity, if not more.
Information about wines and spirits has never been more readily available to the uninitiated. If you would just spend five minutes with a quick search, there’s a greater willingness to purchase higher-priced wines or spirits without feeling like you’re taking a gamble.
A willingness to spend, coupled with a hyper-focused, collectivist-like preference in terms of purchases, might sound like a recipe for disaster in the form of product shortages and surging prices. But this is an eventuality that those who enjoy the finer things in life should be prepared for; it’s just that we’re witnessing the stages of progress from relative unknown to hyped up superstar at an unreal speed.
The upside of this phenomenon is that alternatives get a chance to shine.
Champagne is the perfect example. Its relatively small production volume gets shown up early, and we get to see other sides of the sparkling wine category very quickly. Alongside Crémant, Cava and Prosecco, the world can revisit pétillant naturel (or pet nat), an old but somewhat forgotten style of sparkling wine. Consumers are likely be willing to pay beyond what they would normally be worth — for prime examples, of course — thanks to the shortage of their more prestigious cousin.
Perhaps, maybe this wave of openness may well be what the sustainable, organic and biodynamic wine movement needs to lose its negative stigma; perhaps the narrative that doing things the natural way may finally start to outweigh the orthodoxy of traditional norms — it’s striking that studies indicate that the power of suggestion has plenty to do with the current state of affairs. There are sufficient examples: Telmont of France, Domaine Bousquet in Argentina, and Benziger Family Winery in California demonstrate that sustainability and quality can go hand in hand.
The word premiumisation may sound like a cynical cash grab, and that’s understandable — some offerings do not offer as much value — but we have to consider the big picture.
And it’s a pretty good one, actually.
To see more premiumisation examples in the world of wines and whiskies, visit the upcoming ProWine Singapore 2024 happening 23 to 26 April 2024. Members of the trade can sign up here: https://registration.fhafnb.com/prowine-2024.
[Main photo credit: Spirited Singapore | Joel Lim Photography]
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