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Market Analysis of Luxury Goods by Euro Monitr
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TRENDS AND INSIGHTS IN THE GLOBAL LUXURY GOODS MARKET 2014 POWERED BY PASSPORT FROM EUROMONITOR INTERNATIONAL
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TRENDS AND INSIGHTS IN THE GLOBAL LUXURY GOODS MARKET2014

POWERED BY PASSPORT FROM EUROMONITOR INTERNATIONAL

WHAT IS PASSPORT

NEW INSIGHTS: GLOBAL SNAPSHOT

EMERGING MARKETS

DEVELOPED MARKETS

KEY CATEGORY TRENDS

E-COMMERCE

M&A

PASSPORT: LUXURY GOODS DATA UPDATE 2014

© Euromonitor International

3

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PassportOVERVIEW OF PASSPORT

WHAT IS PASSPORT

NEW INSIGHTS: GLOBAL SNAPSHOT

EMERGING MARKETS

DEVELOPED MARKETS

KEY CATEGORY TRENDS

E-COMMERCE

M&A

PASSPORT: LUXURY GOODS DATA UPDATE 2014

© Euromonitor International

6

Key Points: What Every Player Wants to KnowNEW INSIGHTS: GLOBAL SNAPSHOT

What’s the global growth trend?

?

Where’s “the next China?”

?

Where’s the value??

© Euromonitor International

7

Luxury Goods Sales in Excess of US$317 Billion and Growing…

NEW INSIGHTS: GLOBAL SNAPSHOT

Continued growth Strength from emerging economies

China Spending rising steeply despite government clampdown

Japan A weaker yen bolstering Japan’s penchant for luxury

Affordable luxury Still breaking new ground especially in developed markets

Expanding middle class

Expanding B and C class in emerging economies fuelling a new culture of luxury aspiration

© Euromonitor International

8

2008 9 10 11 12 13 14 15 16 17 20180

50

100

150

200

250

300

350

400

450

-10

-5

0

5

10

15

Global Luxury Sales (US$ billion) and Growth 2008-2018

US$ billion Year-on-Year % Growth

US$

bill

ion

% Y

-o-Y

Valu

e G

row

th

Luxury Goods Power On..NEW INSIGHTS: GLOBAL SNAPSHOT

© Euromonitor International

9

Category

2013US$

million (current)

2014US$

million (current)

Y-o-Y real

growth 2013-2014

2018US$ million

(current)

CAGR 2013-2018

Designer Apparel (Ready-to-Wear) 132,935 136,785 2.9% 154,299 3.0%

Luxury Jewellery and Timepieces 62,218 65,042 4.5% 78,693 4.8%

Luxury Accessories 51,251 53,488 4.4% 64,652 4.8%

Fine Wines/Champagne and Spirits 29,508 30,600 3.7% 35,931 4.0%

Super Premium Beauty and Personal Care 28,007 28,959 3.4% 33,377 3.6%

Luxury Cigars 5.516 5,635 2.2% 6,077 2.0%

Luxury Travel Goods 4,576 4,754 3.9% 5,512 3.8%

Luxury Writing Instruments and Stationery

2,124 2,160 1.7% 2,376 2.3%

Luxury Electronic Gadgets 1,022 1,043 2.0% 1,236 3.9%

Hard Luxury and Accessories Lead Global GrowthNEW INSIGHTS: GLOBAL SNAPSHOT

WHAT IS PASSPORT

NEW INSIGHTS: GLOBAL SNAPSHOT

EMERGING MARKETS

DEVELOPED MARKETS

KEY CATEGORY TRENDS

E-COMMERCE

M&A

PASSPORT: LUXURY GOODS DATA UPDATE 2014

© Euromonitor International

11

Emerging Markets Will Continue to Drive GrowthNEW INSIGHTS: EMERGING MARKETS

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Luxury Sales Developed vs Emerging Markets 2008 - 2018

Developed Emerging

% v

alue

sha

re

2013

•19%

2018

•25%

2008

•9%

Much of this impressive growth has come from the emerging markets. Where thanks to continued urbanisation, economic development and the overall love of luxury which has brought a large proportion of new consumers into the luxury market.

© Euromonitor International

12

Asia Pacific to Become Regional Leader NEW INSIGHTS: EMERGING MARKETS

© Euromonitor International

13

Luxury Sales Fuelled by Expanding Middle ClassNEW INSIGHTS: EMERGING MARKETS

© Euromonitor International

14

China Overtakes France and Italy Despite Government ClampdownNEW INSIGHTS: EMERGING MARKETS

2013 20180%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Luxury Goods Top Five MarketsValue Share 2013/2018

US Japan China France Italy ROW

Valu

e sh

are

2012 2016 2020

Population in (‘000) above US$150,000 gross income

US 17,947 24,847 33,856

China 2,081.6 3,635.1 5,396

Japan 3,579.9 3,460.3 3,375

Germany 2,201.4 2,561.3 2,930

Australia 1,316.8 1,877.5 2,438.4

France 1,746.6 2,050.4 2,393.8

UK 1,514.8 1,819.9 2,192.8

Brazil 897.6 1,345.9 1,839.8

Russia 667.9 1,090.3 1,548.8

Italy 1,260.7 1,356.0 1,465.3

Canada 923.3 1,089.6 1,278.0

India 515.1 826.6 1,224.4

© Euromonitor International

15

China Set be Number Two in World for Luxury Goods…NEW INSIGHTS: EMERGING MARKETS

China has overtaken France and Italy to become number three in the world. Government crackdown on luxury gifting has led to a slight slowdown in demand but growth potential remains positive.

China's projected 72% value growth by 2018 means China will overtake Japan to become the worlds second largest luxury goods market. China is also forecast to have the second largest population with annual gross income over US$150,000 by 2020 behind the US.

© Euromonitor International

16

…China’s New Discerning Consumer Leads Brand to Go WestNEW INSIGHTS: EMERGING MARKETS

© Euromonitor International

17

Brazil’s Regional Battle GroundNEW INSIGHTS: EMERGING MARKETS

Brazil’s luxury goods market has been underperforming, given the size of its economy and major brands are yet to extended their presence beyond the three main cities of Rio de Janeiro, Brasilia and São Paulo.

© Euromonitor International

18

Brazil’s Import Tariffs Are a Bigger Barrier Than a Weaker EconomyNEW INSIGHTS: EMERGING MARKETS

Topshop, London US$61

Topshop, São Paulo US$94

Gucci, New York US$2,438

Gucci, São Paulo US$4,370

Brazil’s economic slowdown teamed with ultra-high import tariffs and luxury tax is creating a major barrier for international luxury brands and consumers, despite rapid urbanisation, a fast-growing middle class and greater access to consumer credit.

© Euromonitor International

19

Beyond China, Brazil is one of the most promising growth markets for luxury goods thank to a surging middle class. It’s population with annual gross income over US$150,000 will grow by 46% to reach 1.4 million people by 2018.

Brazil’s Favourable Demographics Will Help Drive GrowthNEW INSIGHTS: EMERGING MARKETS

• +4.6 billion people in social class A, B and C by 2020

© Euromonitor International

20

Brazilians in their late 30s to early 40s had the highest average gross income in 2013. Unlike many of the mature luxury markets such as France and Italy, the very top earners in Brazil fall into the 40-44 age group. These also made up 18% of all Brazilians earning above US$150,000 in 2013.

Brazil Luxury a Young Man’s GameNEW INSIGHTS: EMERGING MARKETS

© Euromonitor International

21

2013 witnessed an important shift in the BRIC economies raising questions as to whether they are becoming less important to the global luxury goods industry

Are the BRICs Still Important to the Luxury Goods Growth Story?NEW INSIGHTS: EMERGING MARKETS

• Despite impressive growth rates these countries only account for around 4% of total luxury goods spend . Which is is set to increase to 5% in constant value terms by 2018

© Euromonitor International

22

Some Sub-Saharan African economies are becoming more attractive to investors thanks to strong growing consumer markets. These economies are however still very much classed as “frontier” markets and will not overtake the BRIC’s any time soon.

Sub-Saharan Africa Next Luxury Hotspot?NEW INSIGHTS: EMERGING MARKETS

Sub-Saharan Africa is the second fastest growing region after Asia

Pacific and home to five of the top 10 fastest growing markets

© Euromonitor International

23

An African Strategy Offers Long-term Investment PromiseNEW INSIGHTS: EMERGING MARKETS

© Euromonitor International

24

Sparkling Future for Nigeria’s Luxury Market?NEW INSIGHTS: EMERGING MARKETS

Peru China Nigeria Chile Poland0

50100150200250300350400450500

Champagne: Top Five Global Growth Markets in Constant Value Terms 2007-12

% v

alue

gro

wth

Champagne: Top Five Global Growth Markets in Total Volume Terms 2007-2012

Country % volume growth 2007-12

% volume CAGR 2007-12

Absolute volume growth (mn litres)

2007/12

Peru 502 43 0.1

China 146 20 0.9

Poland 146 20 0.2

Nigeria 130 18 0.4

Australia 99 14 2.0

Between 2007-2012, Nigeria was the third fastest growing market in the world for total value sales of champagne.

WHAT IS PASSPORT

NEW INSIGHTS: GLOBAL SNAPSHOT

EMERGING MARKETS

DEVELOPED MARKETS

KEY CATEGORY TRENDS

E-COMMERCE

M&A

PASSPORT: LUXURY GOODS DATA UPDATE 2014

© Euromonitor International

26

Developed Luxury Goods Markets Should Not be OverlookedNEW INSIGHTS: DEVELOPED MARKETS

World’s Top Five Luxury Goods Markets by Value Share 2013

US

Japan

China

France

Italy

ROW

© Euromonitor International

28

Could Japan’s Renewed Growth Rival China’s Impressive Trajectory?NEW INSIGHTS: DEVELOPED MARKETS

China still on course to overtake Japan but investment could start to cool

Luxury brands plan to upgrade stores and increase Japanese footprint

Luxury brands confident enough to raise prices - increase profitability

Increase in foreign luxury spend from Asia - favourable exchange rates

Increase in domestic luxury spend - Japanese cannot afford to shop abroad

Weaker yen - 20% to the US$ in 2013

© Euromonitor International

29

BRIC Travellers Boost Luxury Sales in Developed MarketsNEW INSIGHTS: DEVELOPED MARKETS

BRICs: Top Five Developed Market Destinations by Expenditure 2012

• US• France• Germany• Italy• Portugal

Brazil

• Spain• Italy• Germany• France • UK

Russia

• Singapore• US• Switzerland• UK• Hong Kong

India

• Hong Kong• US• South Korea• Singapore• Japan

China

France

Spain

Hong Kong

China

US

0 3 6 9 12 15

Leading Countries for Incoming Tourism Receipts on Shopping 2012

US$ billion

Taiwan

Vietnam

Kenya

India

China

0 3 6 9 12 15

Leading Countries by % CAGR in Out-bound Tourism Expenditure on Shopping

2012-2017

% CAGR 2012-2017

© Euromonitor International

30

BRIC Travellers Boost Luxury Sales in Developed MarketsNEW INSIGHTS: DEVELOPED MARKETS

14%annual growth in

outbound shopping spending by Chinese

travellers

Introduction of China Union Pay

© Euromonitor International

31

Brazilian Tourism Boom Benefiting US Stores NEW INSIGHTS: DEVELOPED MARKETS

WHAT IS PASSPORT

NEW INSIGHTS: GLOBAL SNAPSHOT

EMERGING MARKETS

DEVELOPED MARKETS

KEY CATEGORY TRENDS

E-COMMERCE

M&A

PASSPORT: LUXURY GOODS DATA UPDATE 2014

© Euromonitor International

33

Soft Luxury Houses Move into Hard LuxuryNEW INSIGHTS: KEY CATEGORY TRENDS

© Euromonitor International

34

Fashion Brands Ramp Up Exposure Across Full Beauty RemitNEW INSIGHTS: KEY CATEGORY TRENDS

Marc Jacobs 2013 Tom Ford 2011Tom Ford Men 2013

Burberry Michael Kors 2013 Tory Burch 2013

© Euromonitor International

35

The Parallel Trajectories of Apparel and BeautyNEW INSIGHTS: KEY CATEGORY TRENDS

© Euromonitor International

36

Men’s Global Luxury Growth Outpaces Women’s NEW INSIGHTS: KEY CATEGORY TRENDS

Designer Clothing

Designer Footwear

Luxury Sun Glasses

Luxury Bags

Luxury Jewellery

Luxury Timepieces

0

5

10

15

20

25

30

35

40

Global Men’s and Women’s Luxury Categories Retail Value Growth 2008-2013

Men % Growth 2008-13 Women % Growth 2008-13 Men % CAGR 2008-13Women % CAGR 2008-13

% G

row

th

Men +16%

% CAGR3.0

Women+12%

% CAGR2.0

2008

2013

2008

2013

© Euromonitor International

37

Is Luxury Manning Up?NEW INSIGHTS: KEY CATEGORY TRENDS

From Mexico City to Beijing, men are putting higher stock in their appearance. This is especially visible in the emerging markets of Asia-Pacific and Latin America where thanks to growth across the young male aspirational consumer, categories like men’s luxury accessories and jewellery are growing faster than women's.

WHAT IS PASSPORT

NEW INSIGHTS: GLOBAL SNAPSHOT

EMERGING MARKETS

DEVELOPED MARKETS

KEY CATEGORY TRENDS

E-COMMERCE

M&A

PASSPORT: LUXURY GOODS DATA UPDATE 2014

© Euromonitor International

39

The Rise of Online RetailingNEW INSIGHTS: E-COMMERCE

Sales of Luxury Goods by E-Commerce 2008-2013

Value share 2008

Value share 2013

Growth 2008-2013

World 4.3% 5.3% 23%

UK 11.3% 13.6% 20%

Germany 8.5% 10.6% 25%

Japan 8.9% 9.9% 11%

France 6.2% 8.9% 43%

Switzerland 6.9% 7.4% 8%

Hong Kong 0.2% 0.5% 130%

China 0.0% 0.4% 191%

Ukraine 0.1% 0.1% 356%

Philippines 0.1% 0.1% 27%

Malaysia 0.1% 0.1% 76%

Deve

lop

ed

Em

erg

ing

© Euromonitor International

40

The Rise of Online Retailing and Social MediaNEW INSIGHTS: E-COMMERCE

Developed

Emerging

WHAT IS PASSPORT

NEW INSIGHTS

GLOBAL SNAPSHOT

EMERGING MARKETS

DEVELOPED MARKETS

KEY CATEGORY TRENDS

E-COMMERCE

M&A

PASSPORT: LUXURY GOODS DATA UPDATE 2014

© Euromonitor International

42

2013 Saw Flurry of M&A’s Driven by Big Names and Italian TargetsNEW INSIGHTS: M&A

The outlook for 2014 is much the same as 2013, with a number of heavyweight M&A deals in the pipeline

The top acquirers are France based (US$11.2 billion) and top targets are Italian (US$8.2 billion)

LVMH leads at US$10.4 billion with 30 deals since 2010 and 61% of value

There were 26 announced luxury deals in 2013 totalling US$17 billion, with an average premium of 32%

WHAT IS PASSPORT

NEW INSIGHTS

GLOBAL SNAPSHOT

EMERGING MARKETS

DEVELOPED MARKETS

KEY CATEGORY TRENDS

E-COMMERCE

M&A

PASSPORT: LUXURY GOODS DATA UPDATE 2014

© Euromonitor International

44

Luxury Goods Hierarchy PASSPORT: LUXURY GOODS DATABASE UPDATES

MARKET SIZES» 15 years of comparable data =

10 years historic + 5 years forecasts

COMPANY AND BRAND DATA» Company data by global brand

owner and national subsidiary/licensee

Brand shares at industry and category level

ADDITIONAL DATA» Luxury shopping malls

» Luxury department stores» Cigar clubs

» 32 market comparative pricing data

Luxury Goods

Designer Apparel (Ready-to-Wear)

Luxury Cigars

Luxury Accessories

Luxury Jewellery and Timepieces

Fine Wines/Champagne and Spirits

Super Premium Beauty and Personal Care

Luxury Travel Goods

Luxury Writing Instruments and Stationery

Luxury Electronic Gadgets

© Euromonitor International

45

Country Coverage: 32 Markets PASSPORT: LUXURY GOODS DATABASE UPDATES

FR, DE, NL,

CH, ES, SE,

IT, TR, GB

PL, RO,

RU, UK

IN, CN, ID, HK,

MY, PH, SG,

KR, TW, TH, JP

AU

ZA, UAE

MX, AR,

BR

CA, US

© Euromonitor International

46

Strategic Analysis for Greater InsightPASSPORT: LUXURY GOODS DATABASE UPDATES

Global Briefings

Competitor Analysis Datagraphics

Videocasts

© Euromonitor International

47

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