(More wine news on www.vitabella.fr). Luxury groups Richemont, Hermès amd LVMH recently announced their 2009’ sales figures and presented forecasts for 2010. Figures showed that luxury performed well during fourth quarter but full year was quite difficult. LVMH pointed out that champagne sales had problems but 2010 seems to show a nice start. What should luxury wine estates learn from these big companies?
Presentations made to analysts showed that big luxury groups were reactive enough to achieve good results in a terrible global economic slowdown. In fact, luxury performed well at the end of the year and luxury groups are now quite optimistic about 2010’ forecasts. Nevertheless, this crisis has shown that consumers for luxury items have changed habits in 2009 and might never come back to their previous behaviour.
1) Consumers are looking for authentic and genuine luxury. All over the world, more and more people are attracted by luxury products (perfumes, clothes, bags, wines…) and are still willing to pay high prices to make their dreams come true. But they are more selective and choose the most recognized quality brands. In fact, this trend benefited, and will continue to benefit in the future, strong and well established brands. This means for wine estates that some expensive cuvees might never be as successful as they used to be…
2) Champagne is luxury and most champagne producers struggled on international markets with a lower demand and a strong pressure on prices. LVMH sales, down by 1% in 2009, were mainly impacted by wines and spirits (-12%) with champagne sales down by 16%. Champagne producers had difficulties on some historical markets such as UK but also in US, Spain, Italy, Russia and Japan. These are great markets for luxury wines but they strongly reduced their purchases in 2009. In fact, there was a country in 2009 which was still buying and drinking champagne but many champagne producers and wine estates had forgotten its real power: France. With 181 million bottles sold in 2009, France was key in that difficult year to maintain sales figures for champagne brands. In that sense, figures showed that luxury wine estates should be strong on their national market if they want to maintain a long-term profitable development.
3) In luxury, consumers are looking for an experience, not just a product. At Hermès, sales increased by 16% in proprietary stores while wholesale turnover was down by 17%. Inventory reductions due to a lower level of consumption can explain this decrease but a more important fact should be highlighted: consumers for luxury products want to “feel privileged and get a very special treatment” when they buy an expensive item. Entering a beautiful shop, talking to a staff with a high level of training, buying an item in a beautiful package and at the same time feel privileged to look at very expensive products is very exciting for consumers. For luxury wines, this means that the “new consumers” expect, from now on, a unique experience when they buy a wine. Something special beyond the quality of the wine. (More wine news on www.vitabella.fr).
Presentations made to analysts showed that big luxury groups were reactive enough to achieve good results in a terrible global economic slowdown. In fact, luxury performed well at the end of the year and luxury groups are now quite optimistic about 2010’ forecasts. Nevertheless, this crisis has shown that consumers for luxury items have changed habits in 2009 and might never come back to their previous behaviour.
1) Consumers are looking for authentic and genuine luxury. All over the world, more and more people are attracted by luxury products (perfumes, clothes, bags, wines…) and are still willing to pay high prices to make their dreams come true. But they are more selective and choose the most recognized quality brands. In fact, this trend benefited, and will continue to benefit in the future, strong and well established brands. This means for wine estates that some expensive cuvees might never be as successful as they used to be…
2) Champagne is luxury and most champagne producers struggled on international markets with a lower demand and a strong pressure on prices. LVMH sales, down by 1% in 2009, were mainly impacted by wines and spirits (-12%) with champagne sales down by 16%. Champagne producers had difficulties on some historical markets such as UK but also in US, Spain, Italy, Russia and Japan. These are great markets for luxury wines but they strongly reduced their purchases in 2009. In fact, there was a country in 2009 which was still buying and drinking champagne but many champagne producers and wine estates had forgotten its real power: France. With 181 million bottles sold in 2009, France was key in that difficult year to maintain sales figures for champagne brands. In that sense, figures showed that luxury wine estates should be strong on their national market if they want to maintain a long-term profitable development.
3) In luxury, consumers are looking for an experience, not just a product. At Hermès, sales increased by 16% in proprietary stores while wholesale turnover was down by 17%. Inventory reductions due to a lower level of consumption can explain this decrease but a more important fact should be highlighted: consumers for luxury products want to “feel privileged and get a very special treatment” when they buy an expensive item. Entering a beautiful shop, talking to a staff with a high level of training, buying an item in a beautiful package and at the same time feel privileged to look at very expensive products is very exciting for consumers. For luxury wines, this means that the “new consumers” expect, from now on, a unique experience when they buy a wine. Something special beyond the quality of the wine. (More wine news on www.vitabella.fr).
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