News Plus 17 Feb 2021 - 3 min read
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‘NEO’ consumers drive economic bounce as Amex leads top 10 ‘Premium’ Brand index, Aston Martin sells out

By Paul McIntyre - Executive Editor

No discounting: Premium consumers are driving high demand for premium brands through Covid

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Tags: DTC luxury direct-to-consumer ecommerce Facebook brand building

Aston Martin has sold out of some models in Australia for 2021 and the bullish demand pattern is similar for other brands that are attracting a premium consumer segment prepared to continue their discretionary spending through downturns, known as NEOs.

What you need to know:
  • Two-step economic recovery being led by higher-spending Neo premium consumer classification
  • They have far less interest in discounting and sales 
  • Top 10 Premium brands table for 2020 sees Freedom and Ikea enter for the first time  

Roy Morgan yesterday released its Top 10 Premium Brands table, in which the “NEO” consumer classification, identified more that 15 years ago by social scientist Dr Ross Honeywill, is showing no signs of retreat through Covid. 

Roy Morgan CEO Michele Levine says there are 10 million Australian consumers “dawdling in the economy’s slow lane” but another 4.7 million premium consumers are leading a two-speed recovery – 91% of NEO consumers, she says, are in the top third of “elective spenders” across the economy.

“There’s very big pent-up demand,” Dr Honeywill told Mi3. “We are hearing from Aston Martin, Porsche and BMW that luxury car brands are just going gangbusters. Aston Martin can’t get enough stock. They've reportedly sold out of some models. It’s just ridiculous. There is really, really strong pent-up consumer demand.” 

Aston Martin can’t get enough stock. They reportedly sold out of some models. It’s just ridiculous. There is really, really strong pent-up consumer demand.

— Dr Ross Honeywill, Executive Director, Centre for Social Economics

Rethink required

Honeywill says the underlying demand in discretionary spending is coming from those 4.7 million-strong NEO consumer classification. Another 4 million Australians are “aspiring NEOs” who have the mindset but are not as cashed-up. 

Dr Honeywill, who is executive director of the Centre for Social Economics, says many brands and marketers struggle with data showing premium, high-margin NEO consumers are far less triggered by discounting and sales than those in the “traditional” consumer classification. Premium consumers, he says, are driving the higher-margin spending economy. 

“Amex was surprisingly active during Covid but it was previously ranked second – it’s a neat brand. Pretty simply, NEOs don’t constantly rush to sales and price activation. In many cases, brands are misreading how people behave. Planet NEO is a very robust place to be as long as you’ve got your branding right. More than 70% of discretionary elective spending is generated by NEOs and aspiring NEOs. That’s 10 million people in Australia. It significant in terms of value.”  

Australia’s Top 10 premium bands for 2020:

  1. American Express
  2. Vintage Cellars
  3. Qantas
  4. Harris Farm Markets
  5. Audi
  6. David Jones
  7. UniSuper
  8. Lexus
  9. Freedom Furniture
  10. Ikea 

Source: Roy Morgan

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