Luxeletter - April edition

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As usual, am pasting the news and stories from this month's Luxeletter for you guys. If you would like to be added to the mailing list, drop me an email and I'll do the needful.

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Indian Luxist

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INDIA NEWS



Stella McCartney’s India plans
Those who love Stella McCartney’s signature style and animal-friendly ethos are in for a treat. The British brand is set to open six stores in India over the next two years, thanks to a distribution deal with TSG International Marketing Pvt. Ltd (promoted by Delhi-based Charu Sachdev). The first two free-standing stores are scheduled to open by the end of 2008. Stella McCartney and TSG are also partnering to save endangered Bengali tigers by working on PETA India’s “Boycott the Circus” campaign and the World Wildlife Fund’s conservation strategy projects.



Three’s a charm for Tod's
Italian luxury goods brand Tod's has announced three boutiques in India. The first of its stores will open at Galleria in Mumbai, followed by DLF Emporio in Delhi later this year. The third store will be located at UB City’s luxury mall in Bangalore. Renowned for its Gommino shoe and über chic handbag collection, Tod's SpA President and CEO Diego Della Valle says India was the next natural step in its strategy to attract a refined clientele in Asia.



Armani Café in Mumbai?
Now that Giorgio Armani has announced his intentions to enter India’s growing market for luxury goods with real estate major DLF, can his elite Armani Café be far behind? Sources in the know say talks are on to set up India’s first Armani Café at the upcoming luxury mall in UB City, Bangalore. The Café is expected to be part of the Emporio Armani retail store within the same premises. Globally, Armani Café is one of the hottest addresses for the hobnobbing swish set.



Luxury on the go
The Government of Karnataka is all set to roll out its luxury train ‘Golden Chariot’ from Bangalore. Aimed at providing tourists a glimpse of the Indian state’s rich natural and cultural heritage (much like the Northern Palace on Wheels), the US $10 million ‘Golden Chariot’ promises to pamper travellers with royal services while visiting cities replete with ancient architecture and Southern dynasties, three UNESCO World Heritage temples, palaces, jungle safaris and beaches. Eleven coaches will carry 88 passengers a distance of around 1,400 km over one week, with the trip ending in Goa at a princely sum of US $2,700 upwards.



Big Bang for the buck
Kingfisher Airlines has started lifestyle retailing on its domestic and international flights in partnership with Geneva-based luxury watchmaker Hublot. The airline will sell special limited edition watches made exclusively for Kingfisher’s First Class customers under the brand name Big Bang King. Priced at US $12,000, only 50 pieces will be available. The company may make these watches available at high-end luxury retail destinations at a later stage. Hublot has also evinced interest in tying up with Indian Premier League cricket teams in India to promote the brand.



Brewing an India strategy
illycaffè, the leading Italian brand of gourmet coffee, has announced the arrival of espressamente illy to India. The Narang Group has been chosen as the master franchisee for developing the high-end café concept in the country. Interestingly, the illy blend is partly made of coffee harvested in India and the chain hopes to open five espressamente illy cafés within the year. The first of the cafes is expected to open at Bangalore airport this month.



Brand conscious Indians
According to the recent ‘Nielsen Global Luxury Brands Study’, India is one of the most brand conscious countries globally. In fact, India ranked third after Greece and Hong Kong in the study, where 35 per cent of Indian respondents agreed to buying designer brands. Out of 500 respondents, 34 per cent spent on Calvin Klein, 25 per cent preferred Gucci and another 24 per cent spend money on Diesel. About 16 per cent spent on Christian Dior and 10 per cent on DKNY. In terms of brands, 41 per cent Indians prefer to buy products of Italian brand Gucci, making it the top country for this brand in the Asia Pacific region.

INTERNATIONAL NEWS



Prada’s best financial results ever
While the rest of the luxury world is dealing with economic slowdowns, Prada SpA is laughing all the way to the bank. The Italian luxury group, which owns Prada and Miu Miu, has announced that its earnings have increased by almost two-thirds in 2007, following exceptional sales of leather goods and accessories in the Asia-Pacific region. Net profits gained 65.8 per cent to US $173.8 million, and sales increased 14.1 per cent to US $2.27 billion. As for its long-delayed plans of announcing an initial public offering (IPO), that is still waiting in the wings.



Popping world records
A limited edition set of Perrier-Jouet champagne might just be the world’s most expensive bubbly. Priced at €4,166 per bottle, or €50,000 for the complete set, only 100 of these champagne sets are going to be produced. To make things more exclusive, the champagne can be personalised after a meeting with Perrier-Jouet’s cellar master in France. A limited edition three-litre Dom Perignon champagne set the previous record in 2005, when it sold for €12,000.



Hermès has it in the Yohji bag
Hermès presented the Yohji bag at the famous Japanese designer Yohji Yamamoto’s Autumn/Winter 2008 show in Paris recently. Not only does this mark the start of a collaboration between Yohji Yamamoto and Hermès, but it is the first time Yamamoto has taken to designing accessories. The limited edition, simple and classy Barenia calfskin leather Yohji bag will only be available at Hermès flagship stores in Paris, Tokyo and London, and ranges from US $6,330 to US $10,960.



Slow and steady
Salvatore Ferragamo SpA, the Italian luxury shoe and handbag manufacturer, will decide on whether to delay its initial public offering (IPO) within two months. The news has come on the heels of a worldwide stock market tumult, with even Prada playing safe on its IPO ambitions. About 80 companies worldwide have delayed or cancelled initial public offerings this year, after the collapse of the US subprime-mortgage market led to concerns that a housing recession may crimp global growth. Luxury labels Damiani SpA and Aeffe SpA are both trading below their IPO prices after their debuts in Milan last year.

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LUXURIATE

Taking luxury to new heights

Owning a private jet may be the ultimate emblem of luxury, but fractional ownership of a luxury aircraft does make a good case for itself in India. Zahra Khan explores the trend



Last November, India’s richest man Mukesh Ambani bought the $60 million Airbus A-319 corporate jet as a gift for his wife Neeta. His younger brother (and India’s fourth richest person) Anil too owns a Bombardier Global Express and Falcon 2000.

However, not every corporate India head honcho worth his frequent flier miles has the time, or the resources, to maintain a luxury business jet. So, an increasing number of high net-worth individuals are opting for a less demanding and (relatively) pocket-friendly means to travel in comfort and luxury. Enter fractional ownership, a concept where several individuals own a share in an aircraft and benefit by splitting overheads such as pilots, maintenance and other expenses.

Says Mark Baier, CEO of BJets, the newest private jet operator in India, “The market for fractional ownership of luxury jets is huge in India. Time is the biggest luxury in business, and private jets allow high-flying corporate honchos to close business deals quickly and spend more time with their family. Also, given the kind of wealth being generated in India, it’s less about saving and more about enjoying life to the fullest today.”

With the highest number of billionaires in Asia to be found in India (Forbes’ recent survey pegged the number at 54), the market has been waiting for ideas like this. Apart from existing players like Club One Air, a host of international companies are making a beeline to Indian shores. While Tata Group chairman Ratan Tata has invested an undisclosed sum in the Singapore-based BJets, the leading global private jet company NetJets has struck up a strategic alliance with Shreyans.

In a recent interview to Economic Times, Shreyans CEO Ashish Chordia (who represents luxury brands such as Porsche, Ducati, Audi, Fendi and Van Cleef & Arpels in India) said, “To block a light weight jet like Hawker 400XP and Cessna Citation for 25 hours of flying time, the cost would be around $200,000, a sum which is within the reach of many individuals in India.”

Indian general aviation company Invision Air too is gearing up to launch its “branded charter” and “luxury air taxi” services in India, thereby democratising the way Indians take to the skies. Says Managing Director Vinit Phatak, “Fractional ownership involves a large amount of payment up front and several additional fees, limiting the market size to Ultra HNIs and some corporations. However, the concepts we are proposing are on a ‘pay-when-you-use’ basis only. This allows us to address the Ultra HNIs as well as HNIs and top executives at large corporations. In addition, one-off users such as tourists, international business visitors and emergency travellers can also access our services.”

To start with, Invision Air will have 20 business jets at their disposal: 18 will be the four-passenger Embraer Phenom 100s and two will be the seven-seater Embraer Phenom 300s. “These jets have lower acquisition costs as well as lower running cost due to more fuel efficient engines. This allows us to bring the customer entry point to a much lower level than the existing point for standard jets being used by international players. This means our addressable market is also much larger. Given the way the India story is panning out, it is clear that more and more small and medium size companies will also be able to afford our private jet services,” says Phatak.

To lean on a cliché: the sky is truly the limit for private aviation in India.

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GUEST COLUMN

It’s all about ‘image’ination

Vogue India’s Fashion Features Director and fashion week regular Bandana Tewari wonders why Indian designers don’t seek inspiration within



Hermès’s India-inspired collection for Spring/Summer 2008I remember one year when a bevy of exotic Indian models were invited to Valentino’s atelier near the Spanish Steps in Rome. I had just finished interviewing Mr Matteo Marzotti, the then CEO of Valentino, and decided to wait to see the girls. All around the staffers and seamstresses lined up excitedly to see the Indian beauties. It was a very warm Mediterranean afternoon and I imagined our ladies arriving in floaty chiffons, sensually cropped Indian kaftans and kohl-lined eyes. To my horror, they arrived in top-to-toe leather, dishevelled hair and trailer-trash make-up, like groupies of a very bad band. I felt a searing loss. One small, simple opportunity to showcase India with pride was lost forever.

It is said that in strategy it is important to see distant things as if they were close and to take a distanced view of close things. As India rises in its economic strengths and the world arrives at our doorstep to explore opportunities for cultural and corporate collaborations, we must ask ourselves how we project ourselves to the rest of the world.

One of reasons why I am so interested in fashion is because I am amazed by the power of clothing. We see before we think, write or read, and fashion—given how visual it is—allows for an instant non-verbal way of communication. Whether we are simply passing through a crowded airport or seated in unending rows with fellow editors during fashion weeks, we never miss the opportunity of sizing up people just by the way they are dressed. And, like it or not, we, as a nation, are being ‘sized up’ as never before.



Tarun Tahiliani’s contemporary take on the traditional sariOne of the most interesting parts of my job in fashion is being privy to what the outside world thinks of India and its fashion. And I ask the question all the time. I remember Bottega Veneta’s Tomas Maier waxing eloquent about India’s “incredible fashion history”; Fendi CEO Michael Burke’s poignant observation that “while the rest of Asia is going gray, India still remains beautifully colourful”; and Diego Della Valle, president of Tod’s and Roger Vivier reiterating how mesmerising the continual impact of saris is in every Indian woman’s life.

At a chic Parisian soirée held by Louis Vuitton’s Yves Carcelle, he remarked how delighted he was with the invigorating energy of New India. And Karl Lagerfeld extended his love for this country by involving Artist Subodh Gupta in his phenomenal Mobile Art extravaganza, that kick-started recently in Hong Kong. Everyone from Giorgio Armani, Jean Paul Gaultier, Christian Dior, Hermès and Marchesa has paid homage to India’s indefatigable power to seduce and inspire in their own collections. These are indeed grand salutations to a country that is magnificently rich and culturally layered.

But what are we doing about our own image from the inside? At Indian fashion weeks, I feel a bit perturbed when alien images of frou-frou and gargantuan ball gowns appear on the ramp that neither do justice to the needs of the Indian consumer nor do they reflect the present bonhomie of experimenting with ‘western labels’. No one should doubt my irrevocable support for Indian fashion, but a lot of shows beg the question: “Who are you designing for?”

I see international buyers looking just as perplexed. Let’s face it: they have not come to India to order ball gowns for their European market. For a western buyer, his focus is really for designs that have an indelible Indian touch (fabric, textures, embellishments) in silhouettes that are easy (clearly Indians are more adept at draping, not cutting).

During one such season in India, Hillary Alexander from The Daily Telegraph remarked that everywhere on the streets she spotted women in saris. Yet, on the ramps they were conspicuous by their absence. Very few designers are able to project India in its new avatar—modern but rooted in an undeniable cultural history. Abu-Sandeep have done it for a decade with the revival of chikan work, zardozi and other antiquated techniques that continue to charm us with their applicability in today’s fashion. Tarun Tahiliani’s AW08 rendition of superlative saris worn with cropped tweed jackets was a beautiful reflection of what contemporary Indian design is all about—appropriating the past with a modern sweep. One look at Anamika Khanna’s or Sonam Dubal’s collections and you can pretty much understand how clothes can effortlessly cross boundaries. But for two fashion weeks and 200 odd designers, the ones who make an impact are too few and far between.

The fact is our socio-cultural and consumer behaviour will continue to be scrutinised by the outside world. This collective perception of ‘Made in India’ is as much about products as it is about behaviour. It is imperative we have ownership over and develop our own image.

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IN THE SPOTLIGHT

'Reducing tariff and non-tariff barriers is critical'

Armando Branchini, secretary general of Italian luxury goods collective Altagamma, holds forth on issues plaguing India’s emerging luxury market



By Zahra Khan

An economist and a professor of Management of Luxury Goods at the prestigious Bocconi University in Italy, Armando Branchini is enthusiastic about India’s growing influence as a purveyor of European luxury goods. As the Secretary General of Altagamma, the association of Italian luxury goods manufacturers (of which Gucci and Ermenegildgo Zegna are a part), Branchini recently hosted the Altagamma-CII Luxury Goods Forum in New Delhi. Here, he talks about the highs and lows that make up the Indian luxury goods industry.

What was the purpose behind the Altagamma-CII Luxury Goods Forum?
It aims to promote and strengthen business relationships between Altagamma member companies and Indian partners. We also address issues regarding the luxury goods market in India, and encourage and facilitate cooperation in the high-end luxury market in India and Italy. One of the highlights this year was the signing of a Memorandum of Understanding between Altagamma and the Confederation of Indian Industry (CII).

What kind of potential does Altagamma see in the Indian luxury market?
There are two main elements that make India a great market for luxury goods. One is the demographic/economic boost: the population of this country is increasing very quickly. At the same time, there is a process of social and economic upgrade that has brought the number of high net-worth individuals up to 100,000, or more. Secondly, there’s the cultural heritage. There is no doubt that this civilization has always been one of the most sophisticated in terms of fine taste. Its history, culture, even its form of religion and spirituality, has contributed to develop a long and glorious tradition of visual arts. The Indian luxury consumer is an exciting challenge for international brands. His attitude is not naïve, but critical and demanding. India’s taste for beauty and also for innovation—unlike many emerging countries—is already well shaped, so international companies must keep this in mind when they offer their products to this market.

What do you think are the biggest challenges in the development of the luxury goods industry in India?
To develop the luxury industry in India, it is necessary to create a free and fair market. To do this, some framework conditions need to be improved. Reducing tariff and non-tariff barriers is critical. The method of calculating countervailing duties based on the maximum retail price (MRP) needs to be reconsidered, as we suggested last year to the Indian Government, with a proposal elaborated by Altagamma and Comité Colbert (its French counterpart). Long custom procedures and bureaucratic barriers make it very difficult for international companies to make any profit, because—in this business more than in others—time is money. Secondly, allowing 100 per cent foreign direct investment (FDI) in ‘single brand retail stores’ would mean a real liberalisation of retail in India. Also, there’s the lack of appropriate retail spaces. Finally, there needs to be a coordinated plan of education in India: this is necessary to create professionals who will be able to manage all the delicate elements of a luxury brand, especially communication and retail.