Has the bubble burst for ‘champagne’ brands?

In July I wrote an observational piece on how some luxury brands were losing ground to younger, hungrier, more inclusive challenger brands, and how this was particularly prevalent at Goodwood Festival of Speed, where Fever-Tree outstripped the popularity of Moet, Martini and others.

But in a world of sanitised conjecture and false facts, it’s perhaps fairer to roadtest my opinion against some hard data. So AUK buddied up with Emily at Iridium Insights, the marketing folk who specialise in the food and drink sector, and asked them to do some digging.

Putting luxury to the test

Rather obviously there are some brand truths that still resonate today, such as authenticity breeding trust and transparency around ingredients lending credibility. But here lies the insight that perhaps debunks a lot of the old strategies luxury brands have traditionally been built on. The ‘look at us we’re perfect’ message is no longer believed as consumer trust has plummeted. In a recent Ipsos Mori study 42% of consumers claim to distrust brands and 69% distrust advertising. Hardly a beacon for our industry, these figures parallel the disheartening lack of confidence people now have in politicians, Europe and the financial sector.

In an ever intensifying search by consumers to buy from brands that wear their hearts on their sleeves, they have inadvertently started to reject the exclusivity offered by some luxury marks. The quest for authenticity has seen the impressive rise in craft beer, against an overall decline in the category. It has shown that smaller brands like Fever-Tree (with 2016 sales up 59%) can take formidable strides in an unexciting world like mixer soft drinks. The ivory towers of the Champagne houses are starting to crumble as they battle image issues, stiffer competition, Brexit and a 9% decline in 2016 sales. The fizz is going flat.

What big brands are getting wrong?

So what exactly is it that’s turning these colossal drinks brands into declining businesses?

The answer is involvement. The principle of exclusivity is shutting the door to the masses and now they’re demanding an invitation.

Consumer spending is on the slide when it comes to products, and on the rise when it comes to experiences. Pre and post 2008 research has shown a marked shift in spending behaviour since the economic crisis, with many retail bosses citing how we may have reached ‘peak stuff’. Brand teams that are willing to engage with people in new, exciting and fun ways are demonstrating sincerity, providing transparency, creating memories and ultimately winning custom. Being perfect isn’t credible, being conversationalist is.

So as consumers hunt for experiences that delight them, challenger brands now have a chance to fight the battles and win the war. We live in an opportune time where big money no longer guarantees market share. It’s exciting to be the challenger, and it’s our duty as marketeers to disrupt the status quo.