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Prada or Powerland? Diane von Furstenberg or Deola Sagoe? Christian Louboutin Evening or Cris Barros? Western consumers might be familiar with the first names in these pairs, but many will probably have never heard of the others.
Yet wealthy consumers in emerging markets are increasingly facing a choice of whether to buy western brands as a status symbol or to opt for homegrown luxury.
Powerland, the Chinese handbag maker, Sagoe, the Nigerian fashion designer, and Barros, the Brazilian designer, are among the handful of luxury brands in developing markets that are gaining popularity with high-end consumers.
Brands such as Louis Vuitton and Gucci have had a stronghold in emerging markets for years. China now has more than a million millionaires, according to Boston Consulting Group, while spending on luxury goods by Chinese consumers is predicted to rise by 18 per cent a year to about $27bn by 2015 – surpassing even Japan, according to a report by McKinsey, the consultancy.
Investors in the west have long advocated buying into western luxury brands as a way of tapping into emerging-market growth without the risks of investing in domestic companies, where political risks remain and attention to shareholder needs may be less concentrated.
Mutual funds such as the Julius Baer Luxury Brands fund in Switzerland or the JPMorgan Global Consumer Trends fund,Christian Louboutin Platforms run by Peter Kirkham in the US, have portfolios including luxury goods groups such as LVMH and Swatch, US accessories line Coach, and Richemont, owner of high-end jeweller Cartier.
 It’s all about the label: a model at the Diane von Furstenberg spring 2011 fashion show in New York (right) and a Deola Sagoe design (left) |
Yet wealthy consumers in emerging markets are increasingly facing a choice of whether to buy western brands as a status symbol or to opt for homegrown luxury.
Powerland, the Chinese handbag maker, Sagoe, the Nigerian fashion designer, and Barros, the Brazilian designer, are among the handful of luxury brands in developing markets that are gaining popularity with high-end consumers.
Brands such as Louis Vuitton and Gucci have had a stronghold in emerging markets for years. China now has more than a million millionaires, according to Boston Consulting Group, while spending on luxury goods by Chinese consumers is predicted to rise by 18 per cent a year to about $27bn by 2015 – surpassing even Japan, according to a report by McKinsey, the consultancy.
Investors in the west have long advocated buying into western luxury brands as a way of tapping into emerging-market growth without the risks of investing in domestic companies, where political risks remain and attention to shareholder needs may be less concentrated.
Mutual funds such as the Julius Baer Luxury Brands fund in Switzerland or the JPMorgan Global Consumer Trends fund,Christian Louboutin Platforms run by Peter Kirkham in the US, have portfolios including luxury goods groups such as LVMH and Swatch, US accessories line Coach, and Richemont, owner of high-end jeweller Cartier.
Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the
Richemont reported 37 per cent of its sales in Asia ex Japan in the year to March, while LVMH had 25 per cent of its sales in the region in 2010. At Burberry, 34 per cent of revenues in the six months to June were in Asia.
But domestic brands are snapping at their heels. Paul Swinand, retail analyst at Morningstar, the data provider, says: “Analysts from China that I’ve talked to have been in agreement that the next generation of growth will be a new wave of local brands.
“It looks like Louis Vuitton, Hermès [the silk tie and handbag maker] and Coach are growing strongly, but that’s from the foothold they already have. The exciting part is people we don’t know already – those that have five stores but will have 100.”
Richemont reported 37 per cent of its sales in Asia ex Japan in the year to March, while LVMH had 25 per cent of its sales in the region in 2010. At Burberry, 34 per cent of revenues in the six months to June were in Asia.
But domestic brands are snapping at their heels. Paul Swinand, retail analyst at Morningstar, the data provider, says: “Analysts from China that I’ve talked to have been in agreement that the next generation of growth will be a new wave of local brands.
“It looks like Louis Vuitton, Hermès [the silk tie and handbag maker] and Coach are growing strongly, but that’s from the foothold they already have. The exciting part is people we don’t know already – those that have five stores but will have 100.”
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