The Lipstick Effect: How to capitalise on the desire for small luxuries

By now, we’ve all heard of the lipstick effect – the habit consumers have for swapping big-ticket purchases for indulgent, small luxuries when times are tough. Thanks to the unique constraints of the Covid-19 pandemic, however, high-end beauty products are out (who needs lipstick when you’re wearing a mask?) while premium food is very much in.

“Forced to stay home, unable to eat out, a portion of restaurant and general leisure spend is definitely being directed towards retail, and it sees shoppers indulging in meaningful experiences, or perhaps comforts,” explains Al Overton, buying director at Planet Organic.

This is good news for Speciality Food readers, who are well-positioned to cater to the growing desire for small luxuries. In fact, demand for higher-quality products is benefitting a number of food and drink categories. High-end brands like Hotel Chocolat have seen that consumers are all too happy to spend more on quality chocolate and confectionery, with sales over the 26 weeks 27th December growing by 11% despite store closures. CEO Angus Thirwell told the Evening Standard that people were “looking for a little bit of happiness in a miserable time”.

Another area that has welcomed a premiumisation boost is the drinks sector. While on-trade remains challenged due to lockdown restrictions, off-trade has seen an uplift in sales, with a spotlight on top-quality varieties. IWSR’s latest trend report said premium-and-above spirits are forecast to increase their global market share over the next three years as consumers begin to favour quality over quantity, including cocktails and high-end sipping spirits.

However, the popularity of Dry January tied with a growing taste for non-alcoholic drinks among the younger generations are also driving demand for premium low or no alcohol drinks. The increasing focus on food with strong health credentials and plant-based options also means these areas are also ripe for premiumisation innovations.

“In January, vegan eating habits and alcohol abstinence mean increased demand for plant-based products and no-alcohol drinks. But within those categories we have certainly been selling more comforting foods,” Al tells Speciality Food. Higher-end options, such as vegan chocolate truffles by Booja Booja, that were popular in the run-up to Christmas, are still selling strongly, he says.

“We see the same in vegan dairy where soft and blue cheese varieties – again typically popular in December – continue to be popular into the New Year. And no-alcohol spirit-type drinks, for example from Three Spirit, which are in a similar price bracket to artisan gins and vodkas, also sell well.”

Hot drinks are attracting a new audience focused on quality, too. Unable to get their typical fix from the café, shoppers have been keen to replicate their favourite drinks at home. Over lockdown, Volcano Coffee Works reported that Brits collectively spent over £2.15bn on coffee machines and products, and premium tea company Jing said sales of its tea-iere jumped 73%, year on year, between March and November, and its porcelain tea infuser sales more than doubled.

The scratch cooking trend has benefitted premium versions of store cupboard staples, and high-quality frozen foods have also witnessed growing interest from a new segment of consumers. “Not being able to go out may mean we are at the end of our home-cooking repertoire, and we have the time to branch out and try something new,” Al says.

However, he thinks the desire for small indulgences runs deeper: “I also think we are looking for rituals to enliven things – how to mark the end of the working day when it just means leaving the spare bedroom, whether it be a non-alcoholic cocktail at 6 o’clock, or vegan truffles for after dinner. That ritual may even just be extra time spent preparing a meal, and in fact one of our biggest sales increases through lockdown has been in our only-organic fruit and veg.”

Whether as a ritualised reward for reaching the end of yet another work-from-home day or a special treat to spice up mealtime, Brits are seeking to fill their homes with quality food and drink. For fine food retailers, communicating the credentials of their offering will be an important step in sealing premium sales.