NIQ: Consumer spending splits between premium and value

CHICAGO — The $1.1 trillion U.S. fast-moving consumer goods market is increasingly splitting between premium and value products, putting pressure on mainstream brands that lack a clear reason for shoppers to trade up or a strong price advantage, according to new research by NIQ and World Data Lab.

The findings, detailed in the new “A Tale of Two Consumers” report, point to what the researchers describe as a “barbell” market. Growth is increasingly concentrated at the premium and value ends as consumers move away from products positioned in the middle.

Rather than simply cutting spending, shoppers are becoming more selective about where they spend, according to the report. Consumers may pay more for products they consider worthwhile in categories such as beauty, wellness, and specialty beverages, while choosing lower-priced or private-label alternatives for household staples and other purchases.

“The US consumer hasn’t stopped spending, but rather, they have become much more intentional about where they spend,” said Ramon Melgarejo, president of Consumer Intelligence Initiatives & E-commerce at NIQ. “Consumers are increasingly asking whether a product truly earns a premium or whether a lower-priced alternative will do the job just as well. Products that fall in the middle are finding it harder to answer that question.”

Premiumization is particularly pronounced in wellness, beauty, and other categories tied to personal identity, according to NIQ and World Data Lab. Younger shoppers are driving growth across beauty, soft drinks, and salty snacks. Gen Z's spending power is projected to reach $12 trillion globally by 2030.

At the other end of the market, private-label brands are becoming a more formidable competitor. Retailer brands are expanding beyond traditional value positioning and increasingly competing in premium segments as well, putting national brands under pressure from both directions.

The research also suggests that conventional demographic segmentation alone may not fully explain purchasing decisions. Income and age remain factors, but shoppers increasingly trade up or down depending on the category, occasion, and perceived value of a product.

“Younger consumers are proving especially influential in shaping premium growth,” said Liz Buchanan, president of North America at NIQ. “However, the broader story is one of increasingly selective consumer behavior, as shoppers of all ages become more deliberate and more willing to switch when products no longer justify their place in the basket.”

For retailers and consumer goods companies, NIQ said the shift makes clear positioning more important than ever. Products caught between compelling value offerings and differentiated premium alternatives will struggle to maintain share as shoppers scrutinize what deserves a place in their baskets.