Ethical Luxury:  

Combining Premium Credentials with Responsible Choices

Modern consumers seek more depth and meaning in their consumption choices. As such, ethicality can have an empowering effect on prestige brands. Using research from GlobalData, Eloise McLennan explores how brands can combine ethical credentials and high-quality products to stand out in the premium space

Today’s informed consumers are increasingly aware of the environmental and ethical challenges faced worldwide. In many markets, they are having a direct impact on quality of life and health, as well as the economy and biodiversity. This in turn is driving desire for more sustainable and responsible solutions, which can mitigate the damage caused through product usage and manufacture, as well as allow consumers to promote sustainability and responsibility through their purchases. With consumers seeking out more meaningful consumption experiences, ethical luxury creates a driver for purchases, but can also justify premium spending among conscious consumers.

Consuming responsible products can give shoppers an elevated sense of status, a factor that encourages them to trade up and pay a premium for products that signify improved sustainability and responsibility. 

Identifying ways that brands can combine premium credentials with responsible practices and social commitments is the focus of a recent report from GlobalData, titled ‘TrendSights Analysis: Ethical Luxury’. In the report, analyst Jamie Mills explores how quality-focused consumers are embracing premium products that they perceive to be ethically responsible and offer superior drinking experiences.

As consumers grow increasingly aware of sustainability and social issues, brands have an opportunity to differentiate their products and justify a higher price position by placing ethics at the heart of the brand ethos, making ethical credentials synonymous with product quality and tapping into the consumer desire to do good through the products they buy. Drawing from the findings detailed in the report, we take a look at the key ways that beverage brands can use ethical luxury to drive a premium position in the market.

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Two in five consumers globally agree that ethical credentials are important when choosing which non-alcoholic beverages to drink

Sustainability has taken a backseat when it comes to alcoholic beverages

Premiumising non-alcoholic

BEVERAGES with ethical credentials 

There are significant opportunities for non-alcoholic beverage brands to premiumise products through ethical and sustainable initiatives, such as Fairtrade and responsible sourcing practices.

Traditionally, sustainability has been treated as a secondary element in premium non-alcoholic beverages. Instead, focus has been placed on health, which has become a key concern for consumers in the wake of the recent sugar backlash and growing health awareness. Competing with the overarching focus on health is a challenge for brands; however, there are opportunities to deliver a premium position product by utilising ethical credentials. Using improved health credentials, brands can differentiate products within the premium space by harnessing these balanced responsibility claims to focus on more than just personal wellbeing. 

According to GlobalData’s 2015 Q1 global consumer survey, two in five consumers globally agree that ethical credentials are important when choosing which non-alcoholic beverages to drink. This indicates that there are opportunities for brands to engage consumers within this space through sustainable and ethical claims. With claims such as Fairtrade now well-established in the hot drinks sector, brands will need to go one step further to provide and explore more unusual ethical claims in order to stand out from the ‘ethical norm’ in the premium space and justify a premium price point.

Important cues, such as food waste concerns, ingredient sourcing and how to dispose of the product after use can be integrated into the brand narrative to help reinforce an ethical identity. However, care must be taken to convey ethical practices in an authentic and convincing way to avoid being perceived as fake or insincere, which can deter consumers from making a purchase. 

UK-produced Karma Cola is a notable example of how brands can use ethical credentials to appeal to consumers. For each bottle sold, a portion of the sale goes directly back into the communities in Sierra Leone, where the raw ingredients in the beverage are farmed. The company has also established the Karma Cola Foundation to support development projects in the region. Both initiatives complement the overall brand ethos, most notably it’s “what goes around comes around” slogan and altruistic positioning. 

Two in five consumers globally agree that ethical credentials are important when choosing which non-alcoholic beverages to drink

Using sustainability and craft

PRODUCTION to elevate alcoholic beverages

The premium nature of the alcoholic beverage category means that shoppers are open to experimentation and are often looking to trade up and pay more for novel or luxury drinking experiences. While notable ethical challenges, in particular the over-consumption of alcohol and the negative effects of alcohol abuse, as well as the overall focus on sensory benefits and the occasions that surround alcohol consumption, have taken precedence over ethics, opportunities exist for brands to better entwine ethical credentials through product positioning.

For the most part, sustainability has taken a backseat when it comes to alcoholic beverages; however, the sector is a key area for development in terms of sustainability credentials, especially within existing premium categories, such as spirits. Brands can engage with the ethical luxury trend by concentrating on sourcing ingredients from sustainable areas. This can then be turned into a marketing opportunity, with brands using sustainable sourcing credentials to promote the quality of their ingredients, as well as the overall drinking experience. Similarly, partnering with ethical programmes, such as community initiatives that align with the brand’s identity and ethos, can help to cement an ethical image and high value of a brand in the eyes of consumers. 

The craft movement has become a popular area for alcoholic beverage brands to premiumise their offerings. Authenticity and quality sit at the heart of the craft trend. Brands in the category actively engage with consumers using authentic messaging and marketing, which complements the traditional, small-scale production methods that craft is famed for. As such, craft can act as a vehicle for brands to tap into the ethical luxury trend. By combining ethical and sustainability credentials with high-quality ingredients to create a locally produced, handmade beverage, brands can align with the craft trend while also differentiating products from competitors by spotlighting ethical practices. This can in turn help brands to justify selling alcoholic beverages at higher price points, as products within the craft movement are generally associated with premium price positions.

Action points for targeting 

the ethical luxury trend

In the drinks sector, where ethical luxury is well-established, moving beyond Fairtrade to look at interesting, underused concepts can help to differentiate products and enhance the luxury appeal of beverages. Environmental responsibility appears to resonate with consumers more than social causes; however, spotlighting more niche issues that align with the brand’s ethos, such as equality concerns, poverty and supporting the local community, can also help to reinforce an ethical brand image and differentiate products from competitors.

Both non-alcoholic and alcoholic beverage manufacturers can take advantage of the premium ‘cues’ that have gained prominence through the craft movement to convey ethical credentials to consumers. For example, combining small batch production with authentic sustainability stories and practices can help to showcase the integrity of ingredients and sourcing. Transparency is crucial for manufacturers looking to tap into the characteristics of the craft movement, so brands should take care to communicate ingredient sourcing methods, production processes and brand ethics in a genuine and compelling way.

Authenticity and quality sit at the heart of the craft trend