What Is Premiumization?

Consumers are feeling the pinch of inflation and are buying less—yet, at the same time, many are still willing to spend more for premium products that deliver genuine added value. Consumer packaged goods (CPG) companies that respond to this classic “flight to quality” response by designing and selling premium versions of their products can bring in more profits from fewer sales. But “premiumization,” as the strategy has been christened, isn’t always straightforward. Successful premiumization strategies vary by industry, market share, consumer demand, and other factors that all boil down to what customers truly value enough to pay more for. In other words, premium positioning isn’t only about higher prices but rather meaningful differentiation that customers can see and feel.

What Is Premiumization?

Premiumization is a pricing strategy to sell more expensive—and more profitable—versions of a product. In this view, the premium product gets an added benefit to justify the price. But premiumization is more about the experience: offering customers something better that makes them happy to pay more.

Think about Coca-Cola’s “Share a Coke” campaign, in which customers printed their names on Coke bottles, or the limited-edition “Game of Thrones” Oreos. The bottles of Disaronno amaretto packaged with premium materials and a commemorative glass, as well as the spectrum of price points and limited editions that Johnnie Walker offers for its whiskies, also represent premiumization in action.

What makes this strategy so powerful is that it meets customers where they are yet doesn’t require a company to change its business model. The business continues doing what it already does well, but it creates tiers of value that allow customers to self-select based on what matters to them and what they’re willing to pay. Some shoppers will stick to the basic version at the lowest price point. Others are willing—sometimes eager—to pay more for something special, exclusive, or just plain better.

Key Takeaways

• Premiumization involves enhancing some aspect of a product, such as its durability, packaging, materials quality, or the overall experience of using it, so that it sells at a higher price.
• Premiumization could also mean emphasizing exclusivity, authenticity, personalization, or other desirable characteristics consistent with the product’s brand.
• CPG companies are well-suited to benefit from the premiumization trend.
• For premiumization to be effective, however, it must be authentic to the brand.

Premiumization Explained

People are generally willing to spend more for greater value. How “greater value” is measured can vary significantly from person to person. True audiophiles and videophiles, for example, are willing to pay surprisingly more than their incomes would suggest for extremely premium sound systems and television screens. More typically, however, buyers are open to pay more for benefits that relate to health and wellness, advanced technology, convenience, and personalization. By integrating these benefits into their products and their product marketing, businesses can coax consumers into spending more for a higher-quality experience. Examples abound, from lubricant WD-40, which offers a pricier bottle with a better sprayer than its competitors, to Krispy Kreme, which now has a line of “fourth price tier” premium doughnuts that include sweet treats made with Hershey’s chocolate.

How Do Brands Premiumize? 10 Tips for Premiumization

Premium products should embody a more exclusive, luxurious, or otherwise better version of a brand’s existing product, but with product attributes and messaging that are consistent with the overall brand and the rest of its offerings. It’s also important to keep in mind that premiumization is not only about delivering a better and more expensive version of a product, but also doing so more profitably.

CPG companies considering premiumization can try one or more of the following approaches.

1. Enhanced product quality: Amplifying a product’s quality with premium materials can help justify a higher price. Consumers may be willing to pay more for a “handcrafted” version of a product if it means they truly receive a premium experience. Shoppers have been paying more for Häagen-Dazs ice cream for decades, due to its high-quality ingredients and the experience of flavor and texture they create.
2. Luxury packaging: Packaging a product in higher-end materials, such as a wooden box for a product that is usually in plastic or a visually striking package design, can be a way to justify a higher retail price without having to meaningfully alter the product. Think about the way Grey Goose vodka stands out on the shelf thanks to its distinctive frosted glass bottles. The market for luxury packaging is expected to reach $23.6 billion in 2025 and continue to grow at 5% annually through 2033.
3. Exclusive/limited editions: By releasing limited special editions of products, such as food flavors associated with certain holidays or cereal boxes featuring TV show characters, businesses can create a sense of scarcity and unveil new opportunities for customers to have an exclusive, personalized relationship with the brand. In one extreme example, Pepsi and Peeps collaborated on a limited-edition marshmallow soda flavor; cans ended up selling online for hundreds of dollars.
4. Brand storytelling: Emphasizing a brand’s heritage or premium characteristics, such as sustainable sourcing or extraordinary craftsmanship—especially if these characteristics are a natural outgrowth of the brand’s story—can be an effective way to help the brand justify higher prices. Examples include Ghirardelli, which emphasizes its heritage dating back to 1852 and its chocolate-making craftsmanship, and Bulleit, whose bourbon marketing focuses on its frontier whiskey heritage and family recipe dating back to the 1830s.
5. Personalization and customization: Starbucks is among the pacesetters in creating personalized customer experiences through a high level of customizability—and proving that consumers are willing to pay more for it. Following suit, Nike lets customers build personalized sneakers for premium prices, M&Ms offers personalized colors and messages, Heinz allows customers to design custom gift labels for ketchup bottles, and, of course, Coca-Cola has produced bottles printed with customers’ names.
6. Health and wellness positioning: This approach is meant to appeal to people seeking healthier, more beneficial options for their well-being—and are willing to pay more for products that deliver them. Examples range from KIND Snacks, which emphasizes wholesome natural ingredients, to Peloton’s fitness equipment and classes.
7. Elevated pricing strategy: Setting a premium price for an ordinary product can tap into buyers’ psychological association of higher prices with exclusivity, quality, and value, even if it’s not appreciably different from competitors in terms of quality. Instead, a premium image can be projected through brand positioning or celebrity endorsements, for example. Modern enterprise resource planning (ERP) systems can help businesses analyze market data and customer behavior to determine optimal premium price points.
8. Strategic retail placement: Selling in luxury settings, such as small boutiques and high-end stores (think: Harrods of London or Bergdorf Goodman in the US), contributes to a product’s perception as premium. The beverage industry has many examples of this strategy. For instance, Nestlé has built San Pellegrino to be a fixture in high-end restaurants, which helps to support its premium price.
9. Influencer and celebrity endorsements: A survey fielded in 2024 reported that 29% of Gen Z consumers purchase products via a social media platform. After developing a market segmentation strategy, businesses can approach audiences with targeted and effective influencer/celebrity endorsements appropriate to each platform. Businesses may choose a very well-known celebrity to open new markets or lesser-known influencers to sway a smaller but more engaged audience.
10. Superior customer experience: Some consumers will pay more for superior experiences. Airlines’ first- and business-class seating are well-known examples, as are their exclusive lounges, free drinks, and priority boarding. Amazon’s Prime service is perhaps the clearest example, though, because members receive the same products they would have without Prime, but faster. Over time, Amazon has added additional perks to Prime, such as streaming video and music.

Elevate and Manage Your Products With NetSuite

NetSuite’s ERP solution provides the tools and data insights companies need for developing, launching, and monitoring premiumization efforts. NetSuite ERP enables businesses to track product performance across different price tiers, analyze customer purchasing patterns, and manage inventory levels for premium product lines. Its real-time analytics help companies identify opportunities for premium offerings, for example, by providing data that can reveal which products have low price sensitivity or strong brand loyalty. Additionally, NetSuite’s order management features equip businesses to create and track different product variations, manage specialized packaging requirements, and execute accurate fulfillment of premium orders. The comprehensive view of operations, inventory, and customer data that NetSuite provides helps CPG businesses make informed decisions about which products to premiumize and how to position them effectively in the market.

Premiumization offers businesses a strategic path to growth, even in challenging economic conditions. But success requires more than simply raising prices—it demands a deep understanding of what consumers truly value and how a brand can authentically deliver it. Whether through improved materials, limited editions, personalized experiences, or strategic positioning, premiumization works best when it aligns with the brand’s identity and creates genuine value for its customers.

Premiumization FAQs

What is the opposite of premiumization?

Premiumization is a strategy to differentiate a brand, its value, and its pricing. Its opposite is commoditization, where products become interchangeable and compete mainly on price. Commodities are raw materials and other basic goods that sell for similar prices regardless of who produced them.