Brands that survive will probably be the ones that know exactly why people choose them — and can prove it beyond survey optimism and PowerPoint confidence.
In today's volatile market, established CPG A-brands are facing a challenge like never before. But with new challenges also come new opportunities. Let's explore what those are...
This blog post delves into today's consumer market for premium CPG products, addressing the challenge and the possible outcomes based on two recent Veylinx webinars:
It is essential to first note four fundamental changes in the CPG landscape over the last ten years.
1. Generational shift
2. Spending concentration at the top
3. Middle segment squeeze
4. AI-assisted shopping
As Veylinx founder Anouar El Haji said during his webinar, younger generations' purchasing habits differ significantly from those of previous generations. Millennials and Gen-Zers tend to deliberately splurge on products they deem to provide a functional benefit—especially Gen-Zers, who regularly treat themselves to accessible indulgences like beauty, fashion and dining, according to McKinsey (Dec 2025). This is a significant contrast compared to Gen X and Baby Boomers.
This shift highlights the need (and opportunity) for companies to better understand younger consumers' behavior and to become brands worth splurging on.
Another big shift is evident in U.S. economic data: almost 50% of consumer spending is now driven by the top 10% of earners. Buying power is highly concentrated, and it can be safely assumed that these top earners are more likely to opt for premium brands than mid-market or budget brands (PYMNTS, Feb 2025). This has created a massive market for premium and super premium brands.
The third change is self-evident and related to this. if 50% of spending in the U.S. is now concentrated in 10% of consumers, then the middle and lower income segments are not keeping pace. This puts pressure on A-brands and others that occupy the mid market. Higher earners lean towards premium brands, while middle-class consumers are trading down to budget brands as their spending power dwindles.
The A-brands in the middle are getting a tight squeeze from both private labels competing on price and quality perception, and from super premium brands, which are capturing emotional functional differentiation.
The fourth trend primarily affects the online shopping environment, but is not limited to it: fast-developing AI. People are already using AI to compare products based on their needs and budgets. A future where AI is doing the grocery shopping directly for consumers is not far-fetched—in fact, it's already arriving. This introduces a new challenge, as AI is not buying products based on feelings and nostalgia but rather on claims, price, and ingredient lists. Accordingly, CPG brands may need to rethink their positioning from the bottom up. Additionally, premium brands will need to prove their value, as signaling it won't be good enough.
The market is challenging, but there are promising opportunities. Yet when CPGs try to develop and launch innovations for the premium segment, they are often rejected by consumers. The overall innovation failure rate is high, and the premium innovation rate may be even higher, according to Anouar.
First, there is the say-do gap, also known as hypothetical bias. People say one thing but do another; it happens all the time, nothing weird. It is not about lying but rather changing our minds, being unsure, forgetting ourselves, being driven by emotions, and more. Another bias that steps into the game, especially with premium products, is aspirational bias.
Aspirational bias occurs when consumers are asked questions tied to their identity—for example, about health or sustainability. Consumers prefer to answer those questions based on their ideal self rather than the person standing in the store (who will more likely put a non-biological plastic shampoo bottle into their basket because it is cheaper and they are familiar with it).
Aspirational bias is particularly problematic in categories like functional beverages, health-forward snacks, and sustainable packaging.
To de-risk premium innovation, leading teams are shifting to behavioral validation. The aim is to measure consumer behavior in the purchase moment and to bridge the gap between what people say they will do and what their actions are.
Approaches like Vickrey auctions, used by Veylinx, introduce “skin in the game,” which works as follows:
Watch an explanation video for more details here.
When market researchers conduct benchmark-driven decision-making to develop and launch premium innovations, it often results in failure:
Relying solely on historical elasticity can systematically over- or undervalue breakthrough ideas.
Not all premium innovations are created equal. Winning requires identifying the true source of value:
Too often, brands invest in all three without understanding which ones actually drive trial and repeat purchase. Therefore, it is important to understand early on what consumers truly want, expect, and need. If behavior is not understood properly or does not align with the research, the product will likely flop.
Precision is therefore critical when launching a premium innovation.
The future of CPG growth is not about choosing between premium and value—it’s about winning at both extremes while being intentional about the middle.
To do that, leading organizations must: