Price, it appears, is no deterrent to a discerning consumer even in a slowing economy. Be it the latest bag from Louis Vuitton, the new convertible from the Audi stable or even a limited edition Rolex, the consumer lifestyle market in India continues to see consumers buying more expensive luxury items and climbing up the value chain (called 'uptrading').
Swiss watch manufacturer Tag Heuer, for instance, is set to introduce its high-end Tag Heuer phones in India in the next 10 days and all the phone sets are already booked. The phone, which will be priced between Rs 230,000 and Rs 250,000, has caught the fancy of consumers who are willing to upgrade from their regular high-end phones to more exclusive luxury. "We have enough bookings to sell out our first stock within the first three days of launch," says Manishi Sanwal, general manager, LVMH India.
Luxury watchmaker International Watch Company, too, plans to open four stores in major cities such as Mumbai, Chennai and Bangalore to establish themselves in the Rs 2,000 crore (Rs 20 billion) luxury watch segment here. The high-end Swiss brand currently offers men's watches in the price range of Rs 2.2 lakh (Rs 220,000) to Rs 32 lakh (Rs 3.2 million).
On the automotive front, the story is similar. India's luxury car market is estimated to have out-performed other Asian countries in sales last year by rising 40 per cent year on year. The most recent evidence of this growth story is the performance numbers of Audi, the German luxury car manufacturer. Audi sold 113 cars in February -- a growth of 95 per cent in comparison to sales of 58 units recorded in the same month last year.
"Uptrading in different consumer segments continues and will continue as the consumer base for the segment remains unaffected by the economic slowdown," confirms Harish Bijoor, brand-domain specialist and CEO, Harish Bijoor Consults Inc.
The reasons for the growth of the luxury industry are not hard to find. The luxury industry is still in a nascent stage in India and is growing at a scorching pace as the aspiration for better products is on the rise. The consumer market in India has shown a high growth trajectory and by 2025 is expected to become the world's fifth biggest consumer market as incomes and living standards are bound to grow, according to an Assocham study.
"The luxury industry is desire-led and people are willing to spend more for more and hence uptrading is very evident," says Sanwal, adding: "I guess very high-end products like watches at $10,000 (around Rs 500,000) and above have a loyal following. These are discretionary spends and are bought by people who are relatively well-off. These buyers have sufficient disposable incomes to insulate them from inflation or interest rate increases."
Even for a category like premium cosmetics, strong growth has compelled many companies to expand their presence and even introduce their most expensive fare in the domestic market. "Cosmetics are untouched by the macro-economic environment because of the low investment involved and higher frequency of usage. Consumption of premium products is growing as it is a small and emerging segment and consumers are vying for better products," says Dinesh Dayal, COO & member of the company's board of directors at L'Oreal India Pvt Ltd. He adds, "Our brand Lancome, for example, which is only two years old in the country, is doing so well that we are investing in growing the brand even as the economic environment is tough."
The action in the premium and luxury spirits segment too is heating up as the high-end brands are appealing to the sensibilities of the Indian consumers. It is thus not surprising that a multinational liquor giant Diageo is increasingly focusing on its reserve brands. "Liquor is still an affordable indulgence and the consumer does not mind uptrading to a luxury brand for enjoying the experience," says Santosh Kanekar, director, marketing, Diageo India."There is a set of consumers who is always willing to upgrade to the latest car model as soon as it is available in the country," notes an industry expert, adding, "These consumers are willing to shell out more if they can own the highest and most exclusive luxury available."