It is India’s time on the global stage; Pakistan is nowhere near it
- India has attracted major brands due to its policies and economic reforms, while Pakistan has battled to just avert default
Last year, Louis Vuitton Moët Hennessy (LVMH), the French conglomerate that specialises in luxury goods, made a monumental pivot towards South Asia. More specifically, towards what is now the world’s most populous nation.
It appointed Bollywood actor Deepika Padukone as ambassador to the most prized brand in its portfolio, Louis Vuitton, which not only expanded on their presence, but comes as a precursor to a deeper, long-term strategy to begin tapping into India’s nearly 120 billionaires and growing aspirational middle income group.
Just last month, Parisian couture house Christian Dior staged its Fall 2023 collection in Mumbai, becoming the first fashion house to unveil its latest collection in India.
Dior’s holding company? Also LVMH.
Parent group LVMH’s shares rose as much as 1% to 838.7 euros ($913), touching a record high the following day.
The storied house quickly became part of a slew of luxury brands pivoting towards new markets in a hunt for their next billions, according to Bloomberg.
Dior, the second-biggest brand of billionaire Bernard Arnault’s French luxury behemoth LVMH, and the decision to add India to its seasonal schedule show the rising interest to tap India’s rising wealth.
The country currently has 119 billionaires, according to Oxfam, and more than 800,000 dollar millionaires. Knight Frank data estimates that India will have 1.4 million millionaires by 2026 – 77% higher than in 2021.
The move also points to Dior’s ability to bring entry-level buyers into the LVMH realm — a rising group of aspirational luxury seekers, especially in the country of 1.4 billion people, through its cosmetics, perfumes and bag offerings.
“It’s a hugely untapped market with middle class on the rise and lots more and lots more, by the year, millionaires,” Deborah Aitken, senior analyst for luxury goods at Bloomberg Intelligence, was quoted as saying.
“It’s vibrant, it’s new design, new color, new technologies into the luxury space, which is hugely needed.”
And that’s just two brands.
How did this come about?
A number of factors, for starters, including serious and consistent reforms improved the investment climate, specifically since the opening of its economy in 1991. India today is a part of the top 100 club on Ease of Doing Business (EoDB).
Altered perceptions is another. India has embraced the propensity of the wealthy to spend, following decades of hiding away riches in a socialist country where spending and ostentatious living was frowned upon.
No doubt, infrastructure, policies and a general social and political environment conducive to growth and Foreign Direct Investment (FDI) have made all this possible.
Pakistani, in comparison, aside from needing economic reforms, also suffers from an identity crisis that is perpetuated through state institutions and a broken education system that are further deterrents.
LVMH’s trajectory
In 2017, LVMH posted revenues of INR1.78 billion in FY17 for India, with its profit up 50 percent to INR80 million. It doesn’t hurt to note that it was also encouraged by the Indian government’s Department of Industrial Policy and Promotion for foreign direct investment (FDI) proposals for single-brand retail.
Louis Vuitton’s FDI proposal was to allow the addition of more products which likely boosted its revenues over time.
In 2022, Reuters reported that luxury German car manufacturer, Mercedes Benz, was also playing the long game in India.
India – largely a small and low-cost car market in which luxury models account for just over 1% of total annual sales of about 3 million – saw Mercedes selling a record number of high-end cars last year.
Knight Frank data for 2022 showed 53% of ultra-wealthy individuals splurged on both luxury watches and handbags, compared with an average 41% and 9% in 2020, respectively.
Also in motion was India’s start-up frenzy and stock market boom which created a new breed of wealthy spenders on luxury brands such as Rolex, Louis Vuitton and Gucci, according to the 2021 Hurun India Wealth Report, as reported by Reuters.
The number of Indian households with a net worth of at least a million dollars grew 11% in 2021 to 458,000 and is expected to increase by 30% over the next five years, the report concluded.
“The base is getting broader and gradually moving beyond our traditional customers,” Martin Schwenk, chief executive of Mercedes-Benz India, told Reuters in an interview in the western industrial city of Pune, home to Mercedes’ India headquarters and manufacturing plant.
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Last month, the world saw a spectacular opening of the Nita Mukesh Ambani Cultural Centre (NMACC) in Mumbai, a multidisciplinary cultural center, replete with a fashion exhibit curated by Vogue magazine’s global editor Hamish Bowles, which drew the global fashion fraternity across Paris, London, Milan and New York to take note and attend.
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Among others, the Ambani family, no stranger to luxury, has played a pivotal role in not only modernising India but also promoting it on the main stage.
Helmed by billionaire Mukesh Ambani, chairman and managing director of Reliance Industries Limited, coming in at number 12 on the Bloomberg Billionaires Index, his daughter Isha Ambani, leads the conglomerate’s retail business driving all retail, e-commerce and luxury plans.
Incidentally, she is also involved in expanding Reliance’s presence in fashion through the company’s Ajio e-commerce app as well as Reliance’s partnerships with top international brands.
Reliance is also India’s biggest bricks-and-mortar retailer, with plans to expand into e-commerce to take on giants like Amazon.
Isha is no stranger to the rumoured $50,000-a-head seat at the coveted Metropolitan Museum of Art (MET) Gala held in New York each year under the aegis of Vogue doyen Anna Wintour. Taking cue, she flipped the script and helped drive a fashion exhibit titled, ‘India in Fashion: The Impact of Indian Dress and Textiles on the Fashionable Imagination,’ at the NMACC.
A first of its kind in the country, the exhibit showcased the works of pioneering Indian designers like Abu Jani Sandeep Khosla, Sabyasachi Mukherjee and Tarun Tahiliani, complemented by the works of global couturiers such as Christian Dior, Cristóbal Balenciaga, Elsa Schiaparelli, Gabrielle ‘Coco’ Chanel and Yves Saint Laurent.
If these and other brands currently don’t have a presence in India, they will soon. You can bet on it.
India’s Reliance to acquire dozens of brands in $6.5bn consumer goods play
Last year, Indian retailer Aditya Birla Fashion and Retail Ltd entered into a partnership with French luxury retailer, Galeries Lafayette to open stores in the country over the next two to three years, according to reports.
Two flagship stores are currently in the works - one in Mumbai by 2024 and another in New Delhi the following year – which will debut over 200 luxury and designer brands along with an e-commerce platform.
The retail and fashion unit of Aditya Birla group and the rival unit owned by Mukesh Ambani have both been actively pursuant of premium brands the last few years as they compete for a stronger foothold in the luxury realm.
Reliance already owns the massive Jio World Plaza mall in Mumbai, housing LVMH’s Louis Vuitton, Tiffany and Dior along with Kering’s Gucci, Balenciaga and Bottega Veneta housed alongside Richemont’s Cartier and Hermes.
But none of this has happened overnight.
In 2014-2015, FDI inflows in India stood at $45.15 billion and have consistently increased since then. Total FDI inflow grew by 65.3%, from $266.21 billion in 2007-14 to $440.01 billion in 2014-21.
Total FDI inflows in the country over the last 22 years (April 2000 - March 2022) stood at $847 billion while total FDI inflows received in the last 8 years (April 2014- March 2022) was $523 billion – amounting to nearly 40% of total inflow in the last 22 years.
India’s foreign exchange reserves currently stand at $584.25 billion for the week ended April 21, 2023, the Reserve Bank of India’s (RBI) statistical supplement showed on Friday.
Also this week, it was reported that the broadcast venture of India’s Reliance has struck a deal with Warner Bros Discovery Inc. for its streaming platform JioCinema.
The deal between Reliance’s Viacom18 would see Warner Bros as well as its HBO content becoming available on Reliance’s JioCinema app, including popular shows such as ‘Succession’, ‘Game of Thrones’ and the upcoming ‘Harry Potter’ series.
The partnership will be exclusive, deepening Ambani’s media footprint with most of Warner’s marquee content on the JioCinema platform, eschewing rival platforms, Amazon Prime Video and Disney Hotstar.
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The stage, it seems, is all set.
The country, even with its record- breaking population statistics, is primed for years of high growth following decades of preparation by the government, the business community and foreign delegates eager to tap into ripe markets.
Pakistan, verily, should start taking notes – clearly because it hasn’t done so already – and perhaps, chart a new path, building on trade as well as strengthening the economy, but more importantly, consistent policymaking that results in benefits — even if they are seen a few years down the line.
Pakistan’s ‘short-termism’ needs to go.
The article does not necessarily reflect the opinion of Business Recorder or its owners
The writer is Life & Style Editor at Business Recorder
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