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How Africa Can Stake A Claim On The $280B Global Luxury Industry

How Africa Can Stake A Claim On The $280B Global Luxury Industry

By Maryanne Maina | From Mail & Guardian Africa

Luxury,  an industry whose new growth is being driven by developing markets in Brazil, Indonesia, China, Kazakhstan and India, is now beginning to get a slice of Africa action, with markets such as Nigeria, South Africa, Angola, Kenya and Mozambique at the fore.

The growth is in both products and services. In a 2014 report by consulting firm Bain & Company, the global luxury market is on target to reach $$279.5 billion this year, due to rising tourism spending.

The luxury industry ranges from cars, timepieces, house-ware, apparel, and other products. They include Rolls-Royces, La Prairie caviar creams, Vertu phones, Mikimoto pearls, Beluga caviar,  Michelin star restaurants, and haute couture.

The industry is set for even greater fortune as more people become wealthier globally their tastes become highly sophisticated and spending increases. In addition, though not at the level activists and progressives are pushing for, many women are in positions of power and influence, ranging from chief executive officers, managing directors and board members to business owners.

Women power

This has allowed a greater number of women more access to financial resources, swelling the ranks of people with the purchasing power for luxury goods and services. Women have been to known to be huge consumers of luxury in markets such as Japan; they purchased Louis Vuitton bags not just as a fashion item, but also a statement of financially independence.

Louis Vuitton Moet & Hennessey (LVMH) group, the largest luxury group in the world, recorded revenue of $36.44 billion for the year 2013.

It is also an unusual business with its own strategies that differ from other businesses. The marketing strategies applied at L’Oreal or Proctor & Gamble cannot be simulated on a luxury brand.

Making and selling dreams

Luxury products are products of heritage, craftsmanship, history, and emotion over functionality. One does not buy a Lamborghini to drive it to buy groceries or because they really need that car. It is an object of art, you buy it for its beauty and status, not for its function. That is why when a Lamborghini or Ferrari drives up next to you, you regard it with respect. The luxury industry creates and sells dreams.

Notably, 2014 has been an interesting year for the industry with big losses and even bigger profits, a slew of mergers and acquisitions, and a more intense focus on Africa.

Music heavyweight Jay-Z has just purchased champagne brand Armand de Brignac in a deal whose value remains undisclosed. A bottle of Armand de Brignac Brut Gold sells at $300. By purchasing this brand, known to be consumed by Russian oligarchs and, now, him, he has carved out his position in the group of wealthy global players; a business participant in the luxury universe and not just a consumer.

Another recent famous deal was the initial public offering (IPO) by the well-known luxury shoe business Jimmy Choo, loved by women round the world. The IPO was valued at £545.6 million ($877 million) on the London Stock Exchange (LSE).

Read more at Mail & Guardian Africa