Blinging in Luxury: Navigating the Shimmering Rise of Luxury in India

Alia Bhatt with Gucci, Deepika Padukone representing Louis Vuitton, Ananya Panday adorned in Jimmy Choo, Priyanka Chopra Jonas partnering with Bvlgari, and Katrina Kaif collaborating with Rado. Who would have imagined that movie stars from a developing country like India would become prominent ambassadors for luxury brands on the global stage? The face of global luxury is changing. This reflects India’s rising influence in the global luxury arena.

Defining Luxury

The luxury market comprises a range of high-end products and services associated with superior quality, exclusivity, and prestige. Think of invite-only resorts, luxury apartments, a glass of wine that costs upwards of 4K, bags worth 1Cr, and innovative car features we did not think we needed. In fact, some reports categorize using Swiggy and Zomato services also under luxury.

Let’s look at insights into some of the sectors under the Luxury scope.

Boom in Luxury Cars

The luxury car segment in India is experiencing remarkable growth, with leading brands such as Mercedes-Benz, BMW, and Audi achieving record sales in the first half of 2023. Mercedes-Benz reported its best-ever half-yearly sales with a 13% increase over the previous year. BMW Group also posted record sales of 5,867 units, while Audi witnessed a 97% jump in the same period. Jaguar Land Rover (JLR) achieved its highest-ever nine-month sales in India by December 2023, with a substantial year-on-year growth of 93%. Industry estimates project the entire luxury car segment to reach an all-time high of about 46,000-47,000 cars in 2023.

Factors contributing to this surge include new launches, a strong Indian economy, and positive sentiment, making the luxury car market a focal point for growth in the medium to long term. This surge is propelled by a shift in the mindset of younger, wealthier individuals, along with post-pandemic aspirations for luxury experiences.

Spirited Preferences

The preference for premium alcohol in India has also increased. The preference is two-pronged. One is on the price point and the other is on the innovation in name, packaging, etc. According to data from the Confederation of Indian Alcoholic Beverage Companies (CIABC), high-priced spirits, those above ₹1,000, grew at a faster rate of 48% year-on-year in 2022-23, compared to the 12% growth observed in the less-than-₹500 category. Interestingly, within the above-₹1,000 category, the market share of Indian premium brands increased from 18% in 2021-22 to 20% in 2022-23, indicating a shift in consumer preference towards Indian premium spirits. 

Redefining Living Aspirations

The surge in luxury home sales, witnessing a 97% YoY increase in the first nine months of 2023, signifies a broader shift in buyer priorities beyond affordability. With Delhi-NCR, Mumbai, and Hyderabad emerging as luxury housing hotspots. 

Luxury housing is typically the top 5-10% of homes in a given market in terms of cost. While that varies significantly by location, you can expect to pay at least 50-100% more than the median home price in your area. For the ultra-luxury tier, make that 200-500% more. ̌Aspirations for sophisticated living and secure investments are reshaping the Indian real estate landscape.

Luxury Brands’ Strategic Entry

Global luxury brands are strategically entering the Indian market. Louis Vuitton’s Rani Pink line, Dior’s fall show in Mumbai, and a Bvlgari-branded mangalsutra illustrate this trend. Brands like Armani, Christian Dior, Prada, Tiffany, Valentino, and Balenciaga make inroads into India through partnerships with local companies or independently. As China’s economic growth faces challenges, luxury manufacturers are pinning their hopes on India’s steady growth to drive increased demand for their products. 

Premiumization of online services

While luxury products and services inherently focus on delivering superior quality, exclusivity, and prestige, the integration of an online dimension introduces an additional layer of convenience, enhancing the overall appeal of luxury. Platforms such as Amazon, Flipkart, and Myntra ensure swift deliveries, cater to global luxury brands, and offer exclusive launch of products, among others. Additionally, exclusive services like Zomato Gold, Swiggy One, TataCliQ, and AjioLuxe offer premium or luxury alternatives within their base offering. In essence, these platforms in India showcase diverse strategies to cater to this discerning user segment, reflecting a well-equipped market.

Growth in the Luxury Market

India’s luxury market has experienced remarkable growth, surging from $2.5 billion in 2021 to nearly $8.5 billion in 2023 according to Euromonitor International. A Bain & Co. report estimates that India’s luxury market could reach a remarkable $200 billion by 2030, solidifying its position as one of the fastest-growing luxury markets globally.

This significant expansion is anticipated to be driven by various factors, including an increasing number of ultra-high-net-worth individuals, a rising entrepreneurial class, a strengthening middle class, and augmented demand from Tier II and III cities, alongside a deeper penetration of e-commerce.

What’s driving this change in the Luxury Market?

India is experiencing a significant shift in its economic landscape, marked by a rapidly growing population of affluent individuals and a notable increase in disposable incomes according to a report by CLSA. 

Disposable income ​​is the amount of money that an individual or household has to spend or save after income taxes have been deducted.

Who is using luxury products & services?

A Goldman Sachs report categorizes the top 4% of the working-age population with a per capita income exceeding ~₹8.3L per annum as ‘Affluent India.’

Affluent India’s population has witnessed remarkable growth, expanding at a double-digit growth over the period FY19-23. This group, comprising around 44 million in 2023, is projected to reach approximately 60 million by 2027, reflecting a substantial upward trajectory.

Conclusion

In conclusion, India stands prominently at the center stage of the global luxury market, experiencing an extraordinary surge from $2.5 billion in 2021 to nearly $8.5 billion today. Renowned international brands are not only making strategic forays into the Indian market. Still, they are also embracing the rich cultural fabric of the country, symbolizing India’s growing influence in the luxury space. 

The ease of doing business in India, evident from its 2019 ranking, enhances its appeal to global brands. Interestingly, the luxury market’s reach is not confined to metros; tier II and tier III cities are emerging as significant players, reflecting a more inclusive and dynamic luxury market in India. The trajectory of the luxury market in India signals a compelling narrative of growth, adaptation, and the evolving preferences of its diverse consumer base.

Until our financial paths cross again! ✌️

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