Cramant, France: Savouring a rustic lunch of tuna salad, veal stew, and red wine, Benoit Gouez, chief vintner at Champagne house Moet and Chandon, took a long view of the financial crisis rocking the global economy.
“We are more than two centuries old, and crisis and wars and problems, we have known them all in the past, and we are still here,” he said as pickers harvested the latest crop of Champagne grapes outside.
As fortunes evaporate overnight in the maelstrom hitting world markets, it is the high end of the retail market — sports cars, haute couture, fine wines, Swiss watches, yachts — that might be expected to take the hardest and most immediate hit. But many people in luxury goods are feeling relatively unfazed, confident that the highest echelons of wealth will always have disposable cash.
There are abundant signs that the luxury goods market is holding up — for now.
Ferrari expects 2008 to be another record year, with “more or less constant” sales in US and Europe topped up by growth in countries such as Russia, China and the United Arab Emirates, said chief executive officer Amedeo Felisa.
No Lamborghini orders have been cancelled. Giorgio Armani is going ahead with a fashion hotel in central Milan. And even as Wall Street imploded last month, LVMH — maker of fancy luggage and fine liqueurs — bought Dutch mega-yacht builder Royal van Lent.
“It is true that for sure we have some signals of crisis in some specific markets and in some specific niches,” said Bain and Co. luxury analyst Claudia D’Arpizio. “But overall if we take the world...as a complete market place, the situation is still good.”
She added that the crisis has left unscathed the “absolute consumer” whose super wealth will remain remarkably stable in good times and bad. And emerging economic powers such as China and India, while vulnerable to the financial turmoil, remain growth markets for the luxury sector.
“Even if some people are hit by the crisis, there are still more people drinking Champagne than 10 years ago,” said Moet and Chandon’s Gouez. “The world has never before seen so many people being able to afford so many luxury products.”
While sales have slipped at Italy’s high-end Damiani jeweller, chief executive officer Guido Damiani is confident the dip won’t be too deep. “It’s just enough for the winds to change a little, and the well-to-do will start buying again,” said Damiani.
The bottom line is that no one knows how long the crisis will last. While the world’s luxury makers say they have the stuff to weather this crisis, they also acknowledge it is like none they have witnessed in the past.
The consumer crash after the 11 September terror attacks was a one-time event that wasn’t repeated, and consumers slowly but surely returned to their old ways.
The current financial meltdown, however, is something that has been advancing in stages since last year’s subprime crisis.
Colleen Barry reported from Milan, Joelle Dietrich and Greg Keller contributed from Paris.