Luxury Goods 2014 Conversion

TRENDS AND INSIGHTS IN THE GLOBAL LUXURY
GOODS MARKET
2014
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
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use
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4,000 products and
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115 million data points
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company
WHAT IS PASSPORT
EMERGING MARKETS
DEVELOPED MARKETS
KEY CATEGORY TRENDS
E-COMMERCE
M&A
Key Points: What Every Player Wants to Know
Whats
the
global
growth
trend?
?
Where
s the
next
China?
?
?
Where
s the
value?
Luxury Goods Sales in Excess of US$317 Billion and Growing

Continued growth
Strength from emerging economies
China
Spending rising steeply despite government clampdown
Japan
A weaker yen bolstering Japans 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
Luxury Goods Power On..
Global Luxu ry Sales (US$ billion) and Growth 2008-2018
% Y -o-Y Value G rowth

US$ billion
U S$ billion
Y ear-on-Y ear % G row th
Hard Luxury and Accessories Lead Global Growth

2013
US$
million
(current)
2014
US$
million
(current)
Y-o-Y
real
growth
2013-2014
Designer Apparel (Readyto-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%
Category
2018US$
million
(current)
CAGR
2013-2018
WHAT IS PASSPORT
EMERGING MARKETS
DEVELOPED MARKETS
KEY CATEGORY TRENDS
E-COMMERCE
M&A
NEW INSIGHTS: EMERGING MARKETS
11
Emerging Markets Will Continue to Drive Growth

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.
Luxury Sales Developed vs Emerging Markets 2008 - 2018

100%
90%
80%
70%
60%
% value share
50%
40%
30%
20%
9%
19%
2008
2013
10%
0%
Emerging
Developed
25%
2018
Asia Pacific to Become Regional Leader
12
Luxury Sales Fuelled by Expanding Middle Class
13
14
China Overtakes France and Italy Despite Government Clampdown

2012
Luxury Goods Top Five Markets

Value Share 2013/2018
2016
2020
Population in (000) above US$150,000 gross

income
100%
90%
US
80%
70%
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
20%
Russia
667.9
1,090.3
1,548.8
10%
Italy
1,260.7
1,356.0
1,465.3
923.3
1,089.6
1,278.0
515.1
826.6
1,224.4
Value60%
share
50%
40%
30%
Canada
0%
2013
ROW
Italy
France
2018
China
Japan
India
US
15
China Set be Number Two in World for Luxury Goods

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.
Chinas New Discerning Consumer Leads Brand to Go West
16
17
Brazils Regional Battle Ground

Brazils 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
So Paulo.
18
Brazils Import Tariffs Are a Bigger Barrier Than a Weaker Economy

Brazils 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.
Topshop, London
US$61
Gucci, New York
Topshop, So Paulo
US$94
Gucci, So Paulo
US$2,438
US$4,370
19
Brazils Favourable Demographics Will Help Drive Growth

Beyond China, Brazil is one of the most promising growth markets for luxury goods
thank to a surging middle class. Its population with annual gross income over
US$150,000 will grow by 46% to reach 1.4 million people by 2018.
+4.6 billion people in social

class A, B and C by 2020
Brazil Luxury a Young Mans Game

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.
20
21
Are the BRICs Still Important to the Luxury Goods Growth Story?
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
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
22
Sub-Saharan Africa Next Luxury Hotspot?

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 BRICs any time soon.
Sub-Saharan Africa is the

second fastest growing
region after Asia Pacific
and home to five of the top
10 fastest growing markets
An African Strategy Offers Long-term Investment Promise
23
24
Sparkling Future for Nigerias Luxury Market?

Champagne: Top Five Global Growth Markets in Constant Value Terms 2007-12
500
Between 2007-2012, Nigeria

was the third fastest growing
market in the world for total
value sales of champagne.
400
% value growth
300
200
100
0
Peru
China
Nigeria
Chile
Poland
Champagne: Top Five Global Growth Markets in Total Volume Terms 2007-2012
% 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
99
14
2.0
Country
Australia
WHAT IS PASSPORT
EMERGING MARKETS
DEVELOPED MARKETS
KEY CATEGORY TRENDS
E-COMMERCE
M&A
NEW INSIGHTS: DEVELOPED MARKETS
26
Developed Luxury Goods Markets Should Not be Overlooked
Worlds Top Five Luxury Goods Markets by Value Share 2013

US
Japan
China
France
Italy
ROW
Developed Markets Help Drive Growth in Affordable Luxury
27
Could Japans Renewed Growth Rival Chinas Impressive Trajectory?

Weaker yen - 20% to the US$ in 2013
Increase in domestic luxury spend - Japanese

cannot afford to shop abroad
Increase in foreign luxury spend from Asia favourable exchange rates
Luxury brands confident enough to raise

prices - increase profitability
Luxury brands plan to upgrade stores and

increase Japanese footprint
China still on course to overtake Japan but

investment could start to cool
28
29
BRIC Travellers Boost Luxury Sales in Developed Markets

Leading Countries for Incoming Tourism Receipts on Shopping 2012
BRICs: Top Five Developed Market

Destinations by Expenditure 2012
US
France
Germany
Italy
Portugal
Spain
Italy
Germany
France
UK
US
China
Hong Kong
Spain
France
Brazil
Russia
12
15
US$ billion
Singapore
US
Switzerland
UK
Hong Kong
Hong Kong
US
South Korea
Singapore
Japan
Leading Countries by % CAGR in Outbound Tourism Expenditure on Shopping 2012-2017

China
India
Kenya
India
China
Vietnam
Taiwan
0
12
% CAGR 2012-2017
15
30
BRIC Travellers Boost Luxury Sales in Developed Markets
Introduction of China
Union Pay
14%
annual growth in outbound
shopping spending by
Chinese travellers
Brazilian Tourism Boom Benefiting US Stores
31
WHAT IS PASSPORT
EMERGING MARKETS
DEVELOPED MARKETS
KEY CATEGORY TRENDS
E-COMMERCE
M&A
NEW INSIGHTS: KEY CATEGORY TRENDS
Soft Luxury Houses Move into Hard Luxury
33
34
Fashion Brands Ramp Up Exposure Across Full Beauty Remit
Marc Jacobs 2013
Tom Ford 2011
Burberry
Michael Kors 2013
Tom Ford Men 2013
Tory Burch 2013
The Parallel Trajectories of Apparel and Beauty
35
36
Mens Global Luxury Growth Outpaces Womens

2008
2013
Men
+16%
% CAGR
3.0
2008
Global Mens and Womens Luxury Categories Retail Value Growth 2008-2013
2013
Men % Growth 2008-13
Men % CAGR 2008-13
Women % Growth 2008-13

Women % CAGR 2008-13
Women
+12%
% CAGR
2.0
37
Is Luxury Manning Up?

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 mens luxury accessories and
jewellery are growing faster than
women's.
WHAT IS PASSPORT
EMERGING MARKETS
DEVELOPED MARKETS
KEY CATEGORY TRENDS
E-COMMERCE
M&A
NEW INSIGHTS: E-COMMERCE
39
The Rise of Online Retailing

Sales of Luxury Goods by E-Commerce 20082013
Value
share
2013
Growth
2008-2013
4.3%
5.3%
23%
11.3%
13.6%
20%
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%
0.1%
0.1%
356%
0.1%
0.1%
27%
0.1%
0.1%
76%
World
UK
Germany
Philippines
Emerging
Ukraine
Developed
Value
share
2008
Malaysia
NEW INSIGHTS: E-COMMERCE
The Rise of Online Retailing and Social Media
Developed
Emerging
40
WHAT IS PASSPORT
NEW INSIGHTS
GLOBAL SNAPSHOT
EMERGING MARKETS
DEVELOPED MARKETS
KEY CATEGORY TRENDS
E-COMMERCE
M&A
NEW INSIGHTS: M&A
2013 Saw Flurry of M&As Driven by Big Names and Italian Targets
There were 26 announced luxury deals in 2013 totalling US$17 billion, with an average premium
of 32%
LVMH leads at US$10.4 billion with 30 deals since 2010 and 61% of value
The top acquirers are France based (US$11.2 billion) and top targets are Italian (US$8.2 billion)
The outlook for 2014 is much the same as 2013, with a number of heavyweight M&A deals in the
pipeline
42
WHAT IS PASSPORT
NEW INSIGHTS
GLOBAL SNAPSHOT
EMERGING MARKETS
DEVELOPED MARKETS
KEY CATEGORY TRENDS
E-COMMERCE
M&A
PASSPORT: LUXURY GOODS DATABASE UPDATES
44
Luxury Goods Hierarchy

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
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
45
Country Coverage: 32 Markets
FR, DE, NL,

CH, ES, SE,
IT, TR, GB
PL, RO,
RU, UK
CA, US
IN, CN, ID, HK,
MY, PH, SG,
KR, TW, TH, JP
ZA, UAE
MX, AR,
BR
AU
46
Strategic Analysis for Greater Insight

Competitor Analysis
Global Briefings
Datagraphics
Videocasts
47
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TRENDS AND INSIGHTS IN THE GLOBAL LUXURY

Industries, countries, consumers

800 analysts in 80 countries

Gateway to global strategy

A complete picture of the

NEW INSIGHTS: GLOBAL SNAPSHOT

Key Points: What Every Player Wants to Know

NEW INSIGHTS: GLOBAL SNAPSHOT

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

Strength from emerging economies

Spending rising steeply despite government clampdown

A weaker yen bolstering Japans penchant for luxury

Still breaking new ground especially in developed markets

Expanding B and C class in emerging economies fuelling a new

NEW INSIGHTS: GLOBAL SNAPSHOT

Luxury Goods Power On..

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

% Y -o-Y Value G rowth

Y ear-on-Y ear % G row th

NEW INSIGHTS: GLOBAL SNAPSHOT

Hard Luxury and Accessories Lead Global Growth

Designer Apparel (Readyto-Wear)

Luxury Jewellery and

Fine Wines/Champagne and

Super Premium Beauty and

Luxury Travel Goods

Luxury Writing Instruments

Luxury Electronic Gadgets

NEW INSIGHTS: EMERGING MARKETS

Emerging Markets Will Continue to Drive Growth

Luxury Sales Developed vs Emerging Markets 2008 - 2018

NEW INSIGHTS: EMERGING MARKETS

Asia Pacific to Become Regional Leader

NEW INSIGHTS: EMERGING MARKETS

Luxury Sales Fuelled by Expanding Middle Class

NEW INSIGHTS: EMERGING MARKETS

China Overtakes France and Italy Despite Government Clampdown

Luxury Goods Top Five Markets

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

NEW INSIGHTS: EMERGING MARKETS

China Set be Number Two in World for Luxury Goods

China's projected 72% value growth by 2018

NEW INSIGHTS: EMERGING MARKETS

Chinas New Discerning Consumer Leads Brand to Go West

NEW INSIGHTS: EMERGING MARKETS

Brazils Regional Battle Ground

NEW INSIGHTS: EMERGING MARKETS

Brazils Import Tariffs Are a Bigger Barrier Than a Weaker Economy

Gucci, New York

NEW INSIGHTS: EMERGING MARKETS

Brazils Favourable Demographics Will Help Drive Growth

+4.6 billion people in social

NEW INSIGHTS: EMERGING MARKETS

Brazil Luxury a Young Mans Game

NEW INSIGHTS: EMERGING MARKETS

Despite impressive growth rates

NEW INSIGHTS: EMERGING MARKETS

Sub-Saharan Africa Next Luxury Hotspot?

Sub-Saharan Africa is the

NEW INSIGHTS: EMERGING MARKETS

An African Strategy Offers Long-term Investment Promise

NEW INSIGHTS: EMERGING MARKETS

Sparkling Future for Nigerias Luxury Market?