Luxury goods: Undisputed number one

Visiting fashionistas taking a stroll down São Paulo’s fashionable Oscar Freire street would feel at home. Toy dogs peep out from handbags or trot, arrayed in chic raincoats and paw-gloves, at the feet of their owners. Wafer-thin beauties are on display at the fashionable Cristallo café.

Brazil has comfortably overtaken Mexico to claim the undisputed number one spot in Latin America. The country had 143 individuals with more than $1m of investible assets in 2008, compared with 362 in the UK and 364 in China, according to Capgemini.

Action is focused on the economic powerhouse of São Paulo, which is setting records for conspicuous consumption. These include having one of the largest Ferrari dealership in the world, a large fleet of private jets and being the only city in the world to boast four Tiffany stores.

Sales of upmarket goods have remained buoyant thanks to the country’s economic resilience.

Since 2002, Porsche has grown consistently in the country, notes Marcel Visconde, president of Stuttgart Sportcar, official importer of Porsche in Brazil. In 2008, the company nearly doubled sales from 459 to 723, he notes. A diversification of the product base to more family-style cars, particularly the Cayenne, has helped.

Even the recession did not faze the Brazilian luxury consumer for long. Porsche, for example, did see a big decline in sales between November 2008 and March 2009, as consumers lost confidence and held off from big-ticket purchases, says Mr Visconde.

Confidence has returned, however. He predicts sales in the second half of the year will be 50 per cent above those in the first half and expects to sell between 450-500 cars in the year overall.

H Stern, a luxury international jeweller, also experienced a steep but short-lived fall. Christian Hallot, brand ambassador, says that the company foresaw the fall after a strong performance in 2008 and moved to reduce administrative costs and renegotiate with suppliers, as well as delaying the implementation of long-term projects.

Brazilians are more sanguine about downturns than consumers in the developed world, reckons Mr Hallot.

“We know how to deal with crises, we’ve been through a few. We tend to bounce back and become more optimistic faster than the rest of the world,” he says.

H Stern is confident enough to be launching its new collection of jewellery, which is inspired by the work of the Brazilian landscape designer Roberto Burle Marx, he adds.

The next stages in the growth of the luxury market will be to penetrate new regions of the vast country.

For Porsche, 55 per cent of sales are to consumers in the state of São Paulo with the balance split between Rio de Janeiro and the southern, wealthy states of Parana and Rio Grande do Sul.

Mr Visconde sees opportunities in the centre-west. For larger luxury brands, such as H Stern, the poorer, densely populated north-east is a new focus for store openings.

For now, though, consumers of foreign luxury brands typically have to make it to São Paulo (or Miami) to indulge their tastes, but that is starting to change.

Rio de Janeiro is increasingly established and the capital Brasilia, chock-a-block with bureaucrats and the country’s richest city per capita, is starting to pull in foreign brands.

For incomers, the Brazilian market can look rather different from their home. Marketing high-end brands to consumers is still an art, with a reliance on word-of-mouth and networks for luxury brands, whereas consumer education comes into play for more mass-market products.

Opinion-formers are harder to reach, as Brazil has relatively few high-end fashion magazines, partly thanks to its Portuguese language isolation.

Porsche relies on direct marketing and emphasises rallies and races as well as an exclusive Porsche club. The company tends to shun promotions and newspaper advertising, notes Mr Visconde.

For the more affordable products sold by H Stern, the challenge is more in educating the consumer to emphasise quality and durability over price.

This entry was posted in Articles, Financial Times. Bookmark the permalink.

Comments are closed.