Business World

Saturday 24 February 2018

Luxury brands surge on exclusive products

No 1: Louis Vuitton’s value is put at $25.9bn
No 1: Louis Vuitton’s value is put at $25.9bn

Andrew Roberts

Less is more in luxury.

The value of the top 10 luxury-goods brands surged 16pc to $111bn as companies from LVMH, Moet Hennessy, Louis Vuitton to Burberry made exclusivity a priority over ubiquity, research company Millward Brown said in the 2014 BrandZ study published yesterday.

The Louis Vuitton leather-product label's value jumped 14pc to $25.9bn, placing LVMH's biggest and most profitable brand atop the luxury ranking for the ninth straight year. Hermes, the French maker of Birkin bags that's part-owned by LVMH, also rose 14pc to place second at $21.8bn.

Gucci, a direct competitor to Vuitton, gained 27pc to $16.1bn and was third on the list.

Vuitton is among luxury-goods makers introducing more expensive products with fewer logos and tightening sales networks as wealthy shoppers switch to brands they perceive as being more elite. First-quarter fashion and leather-goods revenue at Paris-based LVMH rose at the fastest pace in two years, indicating that the Vuitton revamp is working. Hermes's goal of 10pc annual revenue growth is almost double industrywide estimate.

"If you lose exclusivity, you lose your luxury status," said Anastasia Kourovskaia, vice president for European, Middle East and African operations at Millward Brown's Optimor consulting arm. Many companies in the category are shying away from an overt focus on increasing market share and distribution to highlight their high-end appeal, she said.

The luxury ranking is part of a broader annual study commissioned by WPP, the advertising-company parent of Millward Brown, that measures brand values across 13 industries.

Clothing brand Prada, watchmaker Rolex, jewellery producer Cartier, and fashion labels Chanel and Burberry placed fourth to eighth in the luxury list, respectively. Burberry's value surged 42pc to $5.9bn, the fastest growth in the segment, as the London-based company halted some promotions on rainwear and leather goods, Millward Brown said.

Coach and Fendi rounded out the top 10 luxury list, though both brands lost value.

Coach, in ninth place, declined 4pc to $3.1bn as its handbags lost cache in the US amid product discounting, Ms Kourovskaia said. Fendi slumped 17pc to $3bn as a lack of investment by owner LVMH led to the fashion house being seen as less relevant by new luxury consumers, she said.

While both labels seem to have arrested the negative momentum in brand perception, winning back customers "is a very long journey," said Kourovskaia.

The Millward Brown study, which ranks brands' value by their earnings and revenue potential, is based on interviews with more than 2 million consumers and an analysis of companies' performance.

Google, owner of the most-used internet search engine, overtook iPhone producer Apple as the world's most valuable brand with its estimated value rising 40pc to $159bn, according to Millward Brown. Apple fell 20pc to $148bn, placing second. Vuitton ranked 30th in brand value across all industries.

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