In a challenging economic climate, it's easy to assume that the cost of a product is the biggest purchase driver. However, it's no longer that simple: low cost does not necessarily equate to good value.
The value equation is complex and is more concerned with delivering benefits beyond simply low price. It’s about the clear and simple communication of a product’s benefits, which is vital right now as brands look to connect with fatigued consumers. The value equation focuses on consumers finding tangible, measurable benefits from their investments, whether that be a new car or a ready to drink (RTD) beverage.
Although the cost of living is rising across many markets, in the beverage industry, the past year has shown that consumers are not motivated solely by low prices. Contrary to expectations, the premiumisation trend is growing and the beverage industry continues to be extremely resilient in the face of economic headwinds.
Consumers determine value based on many factors, and those reasons are not entirely defined by their demographic group. Emotional drivers and need states are increasingly influencing how consumers define value.
Be tailored to the consumer need state
Understanding generational stereotypes has long been an indicator of consumer behaviour and values. Whilst generational trend lines are blurring as the pace of technological change accelerates, the clear trends associated with each generation are still a key barometer of how to best communicate value to each cohort.
Baby Boomers value health and traditional flavours, with ‘natural’ defining ultimate product value. Generation X, the biggest generational cohort in the US and Europe, value the experience of a product and are less cost-conscious. For Millennials, flavour and price are important, however they place far more value on the way in which products are marketed, buying into the story as much as the product. Gen Z place huge value on how a product resonates with them on an emotional level. ‘Better for us not better for you’ is the mantra of this eco-conscious generation. Generation Beta (those born between 2025 and 2039) will be the first to grow up in an artificially intelligent world. As we head into the next decade, we will see consumers relying more on virtual solutions to inspire and affirm their purchases. This will allow products to make simpler claims on pack as algorithms identify the claims that matter most to an individual.
Despite these clear generational indicators, a 2023 global data survey reported that 24% of consumers globally would boycott a brand that does not align with their personal beliefs. This highlights the importance of not pigeonholing consumers into stereotypical groups.
Be committed to quality
We know that beverage consumers will spend more on products that they deem to be higher quality, and a beverage’s naturalness is a big part of that perception. In the non-alcoholic beverage market, consumer surveys cite low cost and high quality products and ingredients as equally important when asked what represents good value for money. Again, this highlights the balancing act required of brands and illustrates how the communication of value will propel their positioning with consumers.
To summarise, value extends far beyond the price. Value is very personal and subjective, largely generationally defined, although not always the case. Value indicators are fluid and change with the world around us. A takeaway for those in the beverage industry is to explore the ways in which ingredients can create both explicit and implicit value. Connecting what consumers get for their money and how they feel about supporting a brand’s purpose will be the drivers in why they choose one brand over another.
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