Premiumize or Perish
Wednesday, 17 September 2008


Thomas Pinnau, an executive at Mars Inc., the world's No. 1 chocolate maker, has an enviable title: Vice President/Indulgence.

Now, in these times of plunging stock prices and falling sales, you'd think Pinnau might be struggling to get people to indulge. It makes sense to drop needless pleasures when cash is short. But this is a recession in which indulgence is thriving, a phenomenon that says much about our world.
Mars, whose M&M's brand is almost as ubiquitous as Coke, has chosen a downturn to introduce a new version of the classic candy called M&M's Premiums. They are to regular M&M's what a glass of Swarovski crystal is to a plastic mug.
Costing about double their plebeian antecedents, M&M's Premiums come in hour-glass shaped re-sealable boxes with oval windows allowing a glimpse of the gem-like candies — finished in a marbleized topcoat of electric turquoise blue (for the chocolate almond version) or granite-like magenta purple (for the triple chocolate.)
In all there are five flavors — mocha, mint chocolate and raspberry almond complete the range — for these pearls of confectionery, stripped of the candy shell that have characterized M&M's since their introduction in 1941.
At a recessionary moment, when corporations from Lehman to Merrill Lynch are casting around for a Vice President/Survival, I asked Pinnau, who's German, what sense it makes to introduce designer M&M's with a price tag to match.
A bundle of sense, he said.
The premium chocolate segment, which more than doubled in size to a $2 billion market between 2001 and 2006, is still growing "twice as fast as mainstream." Although that year-on-year growth rate has dropped in recent months to "between 5 and 10 percent from close to 20 percent," it remains vigorous.
This is the world of "premiumization," a buzzword among global corporations at a time when the luxury market is still expected to jump more than 70 percent to $450 billion by 2012.
I'll try to explain. Wealth is not so much diminishing, although it certainly looks that way right now on Wall Street, as it is shifting to emergent recession-resilient elites in places like Russia, China, India, Dubai and Brazil. They want the same status symbols and brands the world over.
But nobody likes to look like everyone else or consume the same way. The result is what marketers call a "differentiation frenzy." It's particularly acute because, in a postideological world, who you are is defined less by what you think — if you think at all — than by what you purchase and eat.
Tell me how you shop and I'll tell you who you are, whether in Shanghai or San Francisco.
A differentiation frenzy spawns things like Tasmanian Rain water, which justifies its price tag (up to $25 for a 750-millileter bottle in luxury hotels) because it's collected "just minutes from where the World Meteorological Organization records the world's purest air."
In similar mode, you have Renova Black, a "fashionable" toilet paper; jewel-studded cell phones priced at $5,000 and up; Porsche baby strollers; Evian's limited-release "Palace" water; computer mice decorated with exquisite crystal; and of course olive oil so virgin pure the only indecent thing about it is its price.
"You have more and more discerning customers looking for forms of individual expression," Pinnau said.
Individualization and customization are two other marketing buzzwords. You can now order regular M&M's online with an image of your face on them. This enables you to eat yourself, so to speak, an act in which narcissism and individualization merge. Yum.
I'd say premiumization is a pretty good emblem for our 21st-century world. The growth of a global elite is accompanied by a hollowing out of the middle. The base of the social pyramid remains large. Staples like rice and corn still sell; superluxury water (whatever that may be) sells; stuff in the middle does less well. Countries like Mexico increasingly resemble two societies: enclaves of Santa Barbara surrounded by Santa Nada.
That's a world in which superpremium products boasting authenticity and purity (Mars practices a "bean-to-bar" quality standard) thrive even in a recession.
At the start of Fashion Week here in New York, I went to an M&M's Premiums event featuring Eva Longoria Parker, a star of "Desperate Housewives," the mega-hit ABC series. A sexy green M&M's character got things going — "Helloooo my darling fashionistas! Look at this year's must-have accessory, shimmering chocolate gems!" — before Eva appeared in a sequined mocha outfit and sighed in loving supplication to Premiums as photographers oohed and aahed.
"I'm not really a brand person," she told me in an interview afterward, "but I thought, how cool, 67 years with no change in look, and now this! It's a bit of escape, and cheaper than a Hawaiian vacation!"
In a premiumized, Desperate-Houswives recession, things are a little different. Image trumps logic. Adapt or perish.
Roger Cohen joined The New York Times in 1990. He was a foreign correspondent for more than a decade before becoming Foreign Editor in 2001.

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