Why India is the hot spot for luxury brands

The Indian luxury market isn't affected by high inflation figures or the economic slowdown. In fact, it is inching forward towards growth post the slowdown.

It is estimated that the luxury market in India is around USD 5.8 billion (nearly Rs 28,500 crore), is spreading beyond the metros as adoption of global trends is fast catching up in smaller cities, as well.

According to a CII-Kearney report, the Indian luxury market is evolving more rapidly than most of us had foreseen. The luxury market witnessed robust growth of 20 per cent over the past year and is estimated to have reached USD 5.75 billion in 2010.

Another study by Technoapk suggests that the luxury market shall grow to nearly two and half times of its current size over the next five years.

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This growth shall be driven by dynamic lifestyles of the heritage rich as well as the growing number of aspirational rich segment.

It is reported that luxury products have grown the fastest at 29 per cent to reach a size of USD 2.05 billion, well above expectations of 23 per cent.

While, services have grown at 22 per cent to reach USD 0.95 billion and assets have grown at 13 per cent to reach USD 2.75 billion.

No wonder, luxury cars were seen making a line up at the rent 11th Auto Expo in New Delhi.

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In addition to mega metros, mini metros and smaller cities are also becoming a big hub for the luxury brands. Cities like Chandigarh, Surat, Ludhiana, Nagpur, Pune and  Amritsar have witnessed significant growth in income with ascendancy of young and old industrialists and entrepreneurs thus giving rise to the potential luxury consumer.

This consumer is wealthy, eager to spend and most importantly, has the desire to indulge in luxury. According to industry figures, 30 per cent of the business comes from the luxury shopper from these towns.

Brands who have taken a cue from this trend include: Audi, BMW, Montblanc, Canali, Jimmy Choo, Bottega Venetta and Lladro are expanding their presence in these cities.

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With the resurgence in growth of luxury retail, innovative and divergent trends are shaping up the market:

- Luxury services are drawing out new boundary lines to include luxury travel, art rental, customized fine dining and golf guide services.

- Another fine example is emergence of various Cigar and Wine clubs across key cities which cater to the old and new elite.

-  Luxury asset brands are launching their captive arms of financial services. For instance, BMW recently launched a wholly owned subsidiary, BMW Financial Services, with an investment of $50 million in the new business and Mercedes, too, has joined the trend.

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An important trend that developed in the luxury market last year was the these high-end brands are trying to 'bridge to luxury' strategy.

Luxury brands engage the evolving consumer by offering products with pricing that bridge the super premium to luxury price segment.

For instance, BMW, Mercedes and Audi have priced their entry models very competitively in under-Rs 30 lakh price range. This trend is called 'bridged pricing' strategy.

So, now these cars are competitively priced and are at par with super premium cars like Honda Accord, Toyota Prius and Skoda Superb.

The success of this 'bridged' pricing strategy can be gauged by the fact that the BMW 3 series, priced at around Rs 24 lakh, accounts for more than 30 per cent of BMW's India sales.

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It's no doubt that that the luxury market is steadily increasing. We give you a reason to make your wish list. Here are some top luxury brand launches to look out for in 2012.

Automobile:

BMW

BMW launched the Mini brand in India with four models -- Mini Cooper, the Mini Cooper S, the Mini Convertible and the Mini Cooper S Countryman -- priced between 24.9 lakh and Rs 31.99 lakh.

Apart from this, the new BMW M5 will soon be seen in India and it is priced at Rs 95 lakh.

The company also previewed the BMW Vision ConnectedDrive Concept. The company will also launch the new BMW 3 series in July 2012.

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Audi India, which holds the third position in the luxury market will start assembling the Q7 models by end of 2012.

At the recent Auto Expo in New Delhi, the Audi stand displayed the compact SUV - Audi Q3, the new futuristic A3 e-tron concept, the sporty Audi S6 limousine, the most powerful diesel SUV - Audi Q7 V12 and some highlights from the existing Audi India product range.

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Mercedes-Benz launched a luxury SUV, M-Class, which is priced at Rs 58-60 lakh, and an open top vehicle, SLS AMG Roadster, that comes for about Rs 3 crore.

It will also launch the B-Class sometime during the third quarter of this year. The company also showcased the concept A class which is expected to be launched in 2013.

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Apparel and accessories

French luxury brand Hermes – best known for their $350 plain white T-shirts and $10,000 handbags – marked its entry in the Indian luxury market with a line of fancy saris.

Last year, they retailed their saris for $1,800 (Rs 81,000 plus taxes, of course) with another $500 for a matching blouse, the ensemble would cost a tad less than the first collection.

Keeping in mind Indian preferences, Hermes will launch a perfume specific to India by 2012.

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Louis Vuitton is bringing in three premium brands which include beauty retail chain Sephora, Singapore fashion company Sincere and Hong Kong-listed Emperor Watch and Jewellery.

Sephora has over 250 brands under its umbrella, Dior, Aquolina, Diesel, Clarins, D&G, Evian and Canali, and is planning to open around 50 stores in the next couple of years.

Italian brand Salvatore Ferragamo is very optimistic about the opportunities in India. The brand currently has four stores and is all set to expand with another six stores in the next three to five years.

Italian luxury apparel player Emilo Pucci is likely to start its operations in India soon.

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Luxury watchmaker Cartier recently announced the expansion of its distribution network in India.

Cartier is all set to leverage its heritage in India's fast-growing luxury market-expected to grow almost 12 times by 2015 to a $30 billion market.

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Wine and Spirits

Moet Hennessy, the luxe champagne brand that's part of the powerful LVMH group, plans to produce a local Nashik sparkling wine by 2012.

Moet Chandon sells for upwards of Rs. 4,900 a bottle.

Moet Hennessy, the producer of Moet Chandon and Dom Perignon champagne has been in talks to buy land for a Greenfield winery, which will come up over the next two years.