|CURRENT ISSUE NOVEMBER 22, 2004|
|COVER STORY: LUXURY BRANDS|
|Deluxe India |
The world's most coveted luxury brands are now in India. The economic upturn and brand-conscious Indians are creating a market for high-end luxury products, but is it sustainable?
|By Malini Bhupta|
Check out today's affluent, brand-conscious Indian. He is driving a Porsche Cayenne SUV (Rs 50 lakh), his Ermenegildo Zegna suit (Rs 3 lakh) is made from superfine Italian wool, his wrist is adorned with a Patek Philippe Men's Chronograph (Rs 20 lakh), his shades are Tag Heuer Sports Visions (Rs 21,000), his crocodile leather shoes are Hugo Boss 14924's (Rs 19,800), while his mobile phone is the new Nokia Communicator 9500 with a price tag of Rs 52,000. So, what's wrong with this picture?
A couple of years ago-weeks in the case of the Porsche-he would have bought every single item abroad, spending hard-earned foreign exchange, lining up at the vat refund counters at airports and worrying about the weight of his Louis Vuitton suitcase at the check-in counter. Not any more. The world's most prestigious luxury brands are expanding their footprint in India, almost as if discovering the New World. Moreover, it is not just luxury brands, there are also luxury plus for those who have the cash to splash on products with the cachet of exclusivity.
In early October, Jahanavi Dhariwal celebrated her 20th birthday and her doting dad, Pune-based industrialist Manikchand Dhariwal, gifted her the first Maybach to be sold in India. The price tag? A cool Rs 5.25 crore. Dhariwal, a pan masala tycoon, merely walked across to the Pune Mercedes showroom and placed his customised order earlier this year. In Deluxe India, there are those who prefer to be different, like Mukesh Ambani, who ordered his Maybach from London, and even he had to wait for some months before taking delivery. The company says it would take seven months to deliver the "made to order" saloon and expects to sell between nine and 11 cars annually.
Tycoons like Dhariwal and Ambani may represent the top end of India's billionaire club, but the dazzling array of luxury goods available today is clearly catering to the growing number of Indians who are enjoying unprecedented levels of affluence. Consider this: in 2001-2, there were 20,000 families in India with annual incomes of more than Rs 1 crore (source: NCAER Household Income Survey). By 2005, that number is projected to jump to 53,000 families and by 2010, India will have an astounding 1,40,000 crorepatis. The corresponding figure for those with annual incomes between Rs 50 lakh and Rs 1 crore is currently 1,00,000 and is estimated to hit 2,50,000 by 2010.
It is not just Mumbai, Delhi and Bangalore where those with the deepest pockets are located. A town like Nagpur had nine crorepatis in 1995-6. By 2001, that figure had risen to an eye-popping 425, a growth rate of 91 per cent. And, contrary to the popular perception, Delhi has more billionaires than the financial capital, Mumbai. A high-end luxury brand like Ermenegildo Zegna, whose customers include Bill Clinton, Pierce Brosnan, Shah Rukh Khan and Al Pacino, recently made presentations in Ludhiana and Jalandhar.
Like anywhere else in the world, cars are the most visible symbol of a country's high-spending customers. The luxury car market in India has tripled in the past five years. Last month, luxury sports car maker Porsche made its Indian debut with the iconic 911 Carrera turbo, the Boxter and its highly rated Cayenne suv, ranging between Rs 46 lakh and Rs 86 lakh. Says the company's marketing chief for Asia and the Middle East Amaury La Fonta: "India's luxury car market is growing and more people are looking for exclusive cars. Our decision to come to India was based on demand. We are convinced that the market potential of India will grow."
Fonta could be right. Within a week of the launch, Porsche dealers claim to have taken 19 orders in Delhi and 12 in Mumbai, mostly for the Cayenne, and the company expects to sell 40 vehicles in the first year of its Indian debut. Ten years ago, this projection would have been laughed out of court. Super luxury cars like Bentley's Arnage R and its sports version are available locally at prices between Rs 1.5 crore and Rs 4 crore. By next year, Ferrari enthusiaists (Raymond chairman Gautam Singhania has one but only drives it when he goes abroad) will be able to buy the Ferrari Modena in India, along with luxury models from the BMW range, Audi and sports car manufacturer Maserati.
It is a sign of what economic liberalisation has done for millions of Indians. Sure, there are abysmal and shameful levels of poverty and India is still very much a Third World country in many respects. Yet, at the same time, the country's economic growth in the last decade, along with China's, has been the envy of the world. Its per capita income has grown at an incredible rate of 70 per cent during this period. The opening up of the Indian economy and the parallel boom in the IT and services sectors have created an entire generation of wealthy Indians who are distinct from India's traditional business families. In terms of population percentage, it may seem minuscule. The seriously rich and affluent (able to spend $20,000 or Rs 9 lakh a year on conspicuous consumption) represent just 1 per cent of the entire population, but with a base of one billion people, it still adds up to 10 million high-end customers, a substantial number in any market.
They are what is being termed Global Indians, the ones who are travelling abroad at the drop of a Barbour hat (4.5 million Indians travelled overseas last year, this year the figure is expected to touch 5.5 million). They are acquisitive, brand-conscious and, above all, they want the best and they want it now. If they can buy it in their city so much the better. As Jahanavi says: "I am so excited that I can now shop in India for my favourite brands."