Lucrative luxury: a sector set for years of galloping growth
“I’m a man of simple tastes”, Oscar Wilde used to joke. “I’m always satisfied with the best.” People’s idea of luxury goods will depend on their location, income levels and plain old individual taste, while these products also span several industries. Fashion – ranging from haute couture such as Christian Dior to Chanel’s shoes and handbags – is perhaps the most eye-catching area but there are luxury brands in areas as diverse as automobiles, jets, yachts, travel, drinks, watches and jewellery, as well as cosmetics and perfumes.
Whatever your exact definition, however, it is the combination of a strong brand name and perceived high quality that gives luxury goods their cachet – and also explains why they are such a lucrative business and a market-beating long-term investment.
Think of luxury-goods stocks as funds
Many luxury groups are like funds: portfolios of brands spread across a range of product types from watches to handbags that appeal in a variety of different regions at different times. Corporate managers are the stewards of these brands and invest and expand them to maximise the value in their “names”.
Their work has delivered big rewards for the industry and investors alike. Last year, for instance, according to Bain
