Mark Ritson on branding: Go on, spoil yourself; everyone else is

Deus, with its curvaceous bottle and distinctive label, looks like Champagne. It is made in a manner similar, including triple fermentation, some of it carried out in Epernay in the Champagne region of France, and the process of 'degorgement'. And, with a price tag of up to £32 a bottle in some London restaurants, it is a similar price.

But Deus is not Champagne: it is a beer made by Bosteels, one of Belgium's oldest, most venerated breweries, and an attempt to target more affluent and discerning beer drinkers. According to brewery director Antoine Bosteels, 'It's an exclusive product for people who want to experience a new taste.' It is also another example of the growing phenomenon of trading up.

Three years ago the Boston Consulting Group (BCG) published its first report on a nascent trend several of its consultants had identified in the US. Consumers were living longer and becoming more discerning in their tastes for products and services. They were also experiencing the contradiction of massive increases in disposable income with equally huge reductions in the leisure time in which they could spend it. The result, BCG said, was likely to be a gradual increase in consumer spending on luxury goods.

Crucially, this was not just a trend that would benefit existing luxury players such as Gucci, Bollinger and Prada. BCG also predicted that a new generation of traditional consumer goods companies would attempt to play the luxury game and trade up from their existing categories. In markets where there had never been a luxury brand before, new entrants emerged.

They attempted to replicate the uncompromising quality, extended production process, limited availability and super-premium pricing of luxury brands.

In the vodka market, for example, Belvedere and Grey Goose entered the category well above the level of premium players such as Absolut and Smirnoff.

In markets such as leather goods and perfumes, where traditional luxury brands already existed, many non-luxury brands still tried to trade up, this time to a position somewhere between mass consumer brands and the prestige luxury brands. These co-called 'masstige' brands enjoyed the sweet spot between luxury goods and regular brands and were able to charge significantly higher prices while retaining quite widespread distribution.

The most notable masstige brand is Coach. Relatively unknown in Europe, it has become one of the leading brands in the US and Japan. A Coach handbag is beautifully made (in China) and sold through a growing network of more than 500 stores at prices well above the rest of the high street, but well below those of Chanel or Gucci. Steep margins and enormous unit sales have enabled Coach to play a remarkable game in leather goods. While the luxury houses pride themselves on one or two signature collections a year, Coach has consistently and successfully marketed a new collection every month.

Not wanting to miss out on the surge of luxury-hungry consumers, several of the luxury houses are trading down and partnering with non-luxury players. Super-exclusive Italian jeweller Bulgari, for example, recently partnered with Marriott to open a luxury hotel in Milan.

The signs are that the trading up phenomenon is still in its infancy.

BCG's data suggests companies that cater to the new luxury markets are performing better than other firms in their industries. So why not try trading up your Christmas and New Year's festivities? Out with that case of Heineken and in with six bottles of Deus.

30 SECONDS ON ... LUXURY PURCHASES

- The 58-acre estate Updown Court in Windlesham, England, is the most expensive house in the world at more than £70m. It boasts 103 rooms, five swimming pools, a bowling alley, and a 50-seat screening room.

- The 280ft Annaliesse is the most expensive charter yacht in the world, at about £450,000 a week.

- The SSC Ultimate Aero supercar has a claimed top speed of 273mph and a base price of almost £370,000.

- Crown Verity's IG-36 island barbecue with integrated fridge will set you back almost £6100.

- The Neorest toilet made by Japanese company Toto features a heated seat and automatic seat-raising function, and costs about £2800.

- A white Italian truffle weighing 1.2kg (2.6lb) was sold at a charity auction in November for £64,000.

- A yearling racehorse was sold for $13.1m in 1985.

- A 2.5kg, four-wick Jo Malone luxury candle costs £260.

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