Premiumisation in beer explained for strategy and marketing teams

What the word means

Premiumisation describes a shift in what people buy: fewer litres of cheaper beer and more litres of higher-priced beer. Total volume may grow slowly, stay flat or even fall while value grows faster. The drinker drinks the same or less but pays more per glass.

It is a mix story more than a price story. Raising the price of an existing brand is not premiumisation. Drinkers choosing a pricier brand, pack or style is.

How to see it in the numbers

The simplest test is to compare value growth with volume growth over the same period. If value consistently grows faster, average revenue per litre is rising. Then split that rise into price and mix to see how much came from people trading up rather than from price increases.

Most companies sort their brands into price tiers, often economy, mainstream, premium and super premium. Track the share of volume in each tier over time. In India define tiers carefully by state, because excise and pricing differ so much between states that the same brand can sit in different price bands in different places.

Watch the denominator too. A premium tier can gain share simply because the economy tier lost volume to a price hike or a supply problem. That is a shrinking base, not people trading up.

What makes a beer premium in the glass

Marketing builds a premium image. The liquid has to support it. Brewers have several levers:

• Ingredients. An all-malt recipe in place of one with rice or maize adjuncts, a higher share of speciality malt or more aroma hops. Adjuncts are not a fault, many fine lagers use them, but all-malt is a common premium cue.
• Process time. Longer lagering, gentler filtration and more careful packaging all cost tank time and money.
• Freshness and consistency. A premium beer that tastes stale in May because of a hot supply chain undoes the brand promise.
• Style. Wheat beers, IPAs and other craft styles carry higher prices partly because they are made in smaller batches with dearer inputs. Our guide on why craft beer costs more breaks that down.

What makes it premium on the shelf

Pack and presentation do much of the signalling. Smaller packs, cans with strong design, embossed glass, a clear brand story and the right outlets all push perception upward. Where the beer is sold matters as much as how it looks: a brand seen in good bars and restaurants earns a premium that a supermarket listing alone cannot.

Portfolio structure matters as well. Most large brewers keep brands at several tiers so they can catch people as they trade up without losing them to a rival. See beer brand portfolios explained for how that works.

Where the idea gets stretched

Premiumisation is a real trend in many markets. It is not a law of nature. A few cautions for strategy teams:

• Trading up is sensitive to income and mood. In a squeeze people trade down as readily as they traded up.
• A higher price without a better liquid or experience tends to be found out. Drinkers try a premium beer once on the label and come back for the glass.
• Strong beer and mild beer tiers in India behave differently. Excise changes in one state can reshuffle tiers overnight.
• Craft growth and premiumisation overlap but are not the same thing. A craft brand can be priced as premium and still lose if it is not fresh.

For a view of where Indian craft beer is heading, read craft beer market trends in India.

Bringing the brewhouse into the strategy room

The best premium strategies are written by people who have tasted the difference. Put a mainstream lager, an all-malt lager and a fresh craft beer in front of a strategy or marketing team and the conversation changes. People stop talking about premium as a price point and start talking about what drinkers actually notice: body, aroma, freshness and how the beer behaves with food.

Any such tasting should be opt-in and within company policy, with small pours, spit cups and non-drinkers welcome to join by smelling and discussing. The aim is understanding, not consumption.