Guest post by Gary Shansby, Foster alumnus (BA 1959)
There has been a lot of talk these past several months about whether luxury brands will survive the recession, and whether “premiumization” is dead. Contrary to what the pundits, consultants and bankers may be saying, I believe certain niche premium brands are not only surviving the recession but actually creating inroads and growing in this down economy.
I have spent the past 50 years building luxury and premium consumer brands such as Famous Amos Cookies, Mauna Loa Macadamias, Shaklee Nutritional Products, Terra Chips, Voss Water, Pureology Hair Care Products and my latest brand venture, Partida Tequila.
While I’ve never experienced economic conditions of the current level, I have been through numerous market and economic roller coasters and I can say from years of experience that the biggest mistake a luxury brand marketer can make in an economic downturn is to abandon the premium brand positioning and begin price promotions and discounting. This will provide short-term sales relief but ultimately doom the brand—once you break a price, there’s no going back up market.
America has become an investment nation focused on the here and now, and on short-term (quarter-to-quarter) results. Public company CEOs and management teams are unrealistically forced to deal with stock prices, temporary or current trends, and demands built by financial institutions. We know how weak many of those institutions have become.
As a former CEO of a Fortune 500 company, an investor and a proud entrepreneur, I do not believe “premiumization” is dead. Marketers must learn that the growth path to success is not a straight line, and variances occur along the journey of life. Consumers are becoming more and more interested and knowledgeable about what they purchase and especially about what they put in their bodies. I believe premium brands will resume the upward momentum once the economic downswing lightens, and consumer confidence comes back.
I believe that brands that discount, offer lower “deals,” and change their direction for temporary gain will succumb to a form of suicide. Brand equity is all important along with the highest quality products that can be made.
Only time will tell… but my bet is on future growth for truly great premium brands.
Gary Shansby is founder, chairman and CEO of Partida Tequila, LLC and on the advisory board of the UW Foster School of Business.
What do you think? Will premium or luxury brands survive the down economy?
While
University of Washington’s Seattle campus, home to the Foster School of Business, keeps getting greener and was recently noticed for its efforts. Recent UW honors:
Today was a really packed, informative day. We started out with a presentation by Francis Zhang and Johnson Chen of F5 Networks, a company that has found significant success in the Chinese market by entering relatively early (2001) and being patient and consistent. We then hopped on our bus with our guide Elaine and visited the new U.S. Embassy in Beijing, a large and impressive compound designed by a world-reknowned architect and filled with incredible works of art. We spoke with press officers, commercial officers, and economic officers; the sheer complexity of the environment in which they are operating was eye-opening. As we toured around the lobby area to see the art collection, we passed by Jon Huntsman, the new U.S. ambassador to China, who just came to Beijing in August.

Yesterday, we walked across a Tian’anmen Square that was bustling with preparations for New China’s 60th anniversary celebration, just over a week away. On October 1, the Square will fill with military, government, and citizenry to recognize this auspicious occasion, complete with an address by President Hu. Huge video screens are being erected, bleachers established for VIP viewing of the celebrations, and huge red painted columns installed on both the east and west sides. As Beijing pulled out all the stops for the 2008 Summer Olympics, the mood in the Square suggests a similar energy is being given to celebrate China’s progress since 1949. Now that we’ve seen what’s being done to prepare, we’ll have to tune in on TV or online on September 30 to see the result of all this effort.





