How to win premium beverage trade-ups in a polarized market

What motivates premium-spenders and value-seekers

Originally published in Restaurant & Foodservice News

Despite pressure on spending, demand for premium categories and brands remains strong. Nearly half (47 per cent) of consumers say they are likely or very likely to pay extra for a better quality drink, and interest is twice as high among those aged 19 to 34 (60 per cent) and 35 to 54 (58 per cent) as it is in the over 55 age group. This is a reminder of the very active engagement of younger adults, as well as the need to diversify offerings to accommodate different consumer groups, creating appeal among all visitors.

So, what is driving the premium spend for those who are doing so? Research shows that there are many factors involved. One is the spending power of younger adults, as 19- to 34-year-olds are nearly twice as likely on average to be buying more premium drinks than they were a year ago. Another is the desire for self-rewards, with 58 per cent of consumers choosing luxury drinks when they go out as a way to treat themselves.

A third is widespread interest in experimentation. One in three (33 per cent) consumers and 58 per cent of 19 to 34 year-olds have tried a new drink when out over the past month, and trial can lead them towards premium brands. Other factors at play include the suitability of premium drinks for the type of occasions (31 per cent) and the increased frequency of visits to bars and restaurants (30 per cent).

While these premiumizing consumers are vital, it’s also important to understand the motivations of people seeking value. What distinguishes these two is that while premium spending is driven by several factors, value-based spending mostly boils down to financial reasons. Over half (56 per cent) of those buying more value drinks than they were a year ago say it is because they have less disposable income, making it the top factor by some distance. Meanwhile, 27 per cent are doing so because it means they can afford more serves per visit, while 37 per cent think they get better value for money than they do from premium brands.

Ways to reach the premiumizers

How can Canadian brand owners and venues best reach the high-value fans of premium? In an ultra-competitive market, it’s not easy, but research highlights some of the best levers to pull.

It starts with understanding what premium means. Consumers interpret that in various ways when they consider drinks, but the most common association is with the quality of ingredients used (55 per cent), followed by the uniqueness of the drink to a venue (37 per cent) and its expert preparation (31 per cent). These are some of the most effective messages to stress in any brand communications. Local production can also have close connotations with high quality, highlighting Canadians’ eagerness to support nearby businesses.

It’s also important to appreciate the categories where consumers are trading up, and the venues in which they’re doing so. Spirits are in a unique position to capitalize, as 41 per cent of those seeking to treat themselves to a premium drink will typically look to a different category, opening up the potential to attract people away from their usual choices in beer or wine. This is particularly the case in fine dining restaurants, the venues in which consumers are most likely to choose premium drinks.

Premiumizing factors vary from category to category. In spirits and cocktails, the quality of ingredients and the extra touches that people can’t replicate for themselves are most likely to encourage people to trade up, alongside signature serves and flavour twists. These and other factors point to the need to prove to consumers that the drinks and experiences they receive in bars and restaurants are superior to anything they could get at home. In beer, meanwhile, larger serve sizes, brand familiarity and new styles can encourage drinkers to pay more. And in wine, the country of origin and suitability with food are more important.

In all these categories, bar staff play a major role. Nearly half (48 per cent) of consumers ask staff for drink recommendations at least occasionally, and 92 per cent are satisfied with the results. 30 per cent of those choosing premium drinks are influenced by recommendations, so teams can be a powerful driver of trade-ups. This makes bartender advocacy programmes a very good route to connect to consumers and drive brand discovery and satisfaction.

The top takeaway

The size of the prize in premium is clear. On average, consumers are willing to spend around 15 per cent more for a better quality drink in Canada’s on-premise visits, which can result in extra spend for brands aiming to stay competitive. Adapting to consumers’ demands and giving them compelling reasons to trade up – without neglecting the needs of people seeking value options – will be a key part of success in 2026 and beyond.

Data is sourced from CGA by NIQ’s August 2025 Canada On Premise Pulse Report.

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