PicoZ

If you always got what you paid for, then “cheap premium” would be an oxymoron. But more and more, consumers are learning that inexpensive doesn’t have to equate to poor quality.

Exhibit A—for alcohol—is Wodka, a premium vodka from Poland that costs $10 or $12 a bottle. If you’re a regular buyer of the more standard “premium” vodkas like Grey Goose, you know that this Polish brand costs less than half the price of typical status boozes.

BusinessWeek is the latest to look into the premium, or “super-premium,” vodka market, which features Wodka, Sobieski, Svedka, and dozens of other vodkas selling for under $20 a bottle. James Dale, Wodka’s co-owner, explained to BW one of the recession-related reasons why his hooch is so hot:

“We saw psychology change in the U.S. There’s a whole generation that’s now averse to spending more money than they have to.”

During the economic downturn, many grocery shoppers started buying cheaper store brands over national brands in order to knock 30% off their food bills. What they often discovered is that the cheaper generic products’ taste, if not “premium,” was at least as good as the pricier counterparts with big-name brand recognition.

Of course, marketers can put the word “premium” or “ultra premium” on anything—and it doesn’t necessarily mean anything. Generally speaking, the phrase is used pretty much to justify a higher markup. What we’re seeing in the vodka market is that high price does not necessarily mean high quality, and low price doesn’t necessarily mean low quality. Tests cited in the BusinessWeek story prove the point:

In blind tastings by Chicago’s Beverage Testing Institute (BTI), Sobieski scored a 95 out of 100. Svedka (91) and Wódka (90) outranked Double Cross Vodka (87, $49.99) and Shanghai White (83, $65).

In recent years, wine drinkers have also discovered that they like—or at least can make due with—less expensive vino: The fastest-growing segment of the industry is the $9-$12 range. There are also businesses offering sneaky ways to buy $75 bottles of wine for just $25, though this method involves the removal of winery labels—because high-end wineries try desperately to protect their pricey reputations and don’t want drinkers to get used to enjoying their product on the cheap.

For consumers, no matter if they’ve been introduced to “cheap premium” brands out of necessity or “cheap chic” trends, the takeaway is that sometimes the cheaper goods are just as good as pricier items. Thanks to the recession and the way reviews and news spreads so quickly nowadays, the lid is being blown off of so many products getting away with charging more just because they can.

Research studies show that people with low self-esteem are more likely to buy luxury goods. And that makes sense to me: If you don’t feel good about yourself, one way to prove (or try to prove) things are OK is to show off that you can appreciate—and afford—the finer things in life. Conversely, if you have good self-esteem, you don’t feel the need to prove anything or to show off to anybody.

Overall, more and more people are realizing that when they pay a premium, often what they’re paying extra money for is an expensive marketing campaign—which in turn promotes the product for its “premium” status, attempting to convince customers why it’s worthwhile to pay a premium to get it.

And round and round we go.

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