Ourview | Luxury looks east for salvation

Ourview | Luxury looks east for salvation

Legend has it that more Johnnie Walker whisky is consumed in India each year than is produced at the brand’s plants in Scotland.

Whatever be the veracity of that statement, there is little doubt that emerging markets have helped the Scotch whisky industry bounce back from the business lows of last year. Figures released by the Scotch Whisky Association this week show that worldwide sales for the “water of life" has jumped 22% by volume for the first half of this year.

And while the top two countries on the market league tables have remain unchanged—the US and France remain top and both grew by around 14%—new markets have expressed an enhanced liking for the wee dram. Sales in Asia have zoomed up by 33%. Tiny Taiwan is the outperformer. The island only has one-thirteenth the population of the US, but consumes one-fourth as much whisky.

It is not just Italy that is banking on an outstretched Asian helping hand. Brands that make everything from premium whisky to luxury jewellery are currently looking east for salvation.

The global luxury business plummeted quickly after la affaire Lehman. Blue chip customers, spooked by vanishing investments and plummeting net worths, slashed luxury spends mercilessly.

But, it appears, they are also the first buyers to bounce back.

While the poor and middle class all over the world struggle with unemployment, inflation and general economic malaise, the rich are spending again. Last week, Swiss luxury conglomerate Richemont, which owns Cartier, announced that sales had surged 29% in the first five months of 2011. And most of that is owed to booming Asian customers. Richemont even had growing sales in turbulent Japan.

Shares in the group leapt 5%.

One study forecasts that by 2015 China will become the world’s largest luxury market with 20% of all luxe sales.

All this seems bizarre at a time when economic headwinds are bearing against Europe and the US. Emerging markets, we are told, may be overheating.

Yet the rich, somehow, seem to be getting richer. Whisky makers will be happy. Getting richer or poorer are both good reasons for a stiff one on the rocks.

Does the future of luxury lie in emerging markets? Tell us at views@livemint.com