Last week the International Herald Tribune (IHT) hosted its annual luxury business conference in Sao Paulo where over 450 delegates from more than 35 countries came to discuss the recently -recognized Brazilian luxury market. According to Suzy Menke, IHT Fashion Editor and host of the conference, Europe and the United States are old news. “Now is the time for Brazil, for Latin America and for these new markets,” she declared.
“It’s estimated that 400 million luxury consumers live in Latin America, including Mexico. When we first began to visualize this conference two years ago – before knowing that Brazil would be hosting the Olympics in 2016 and the World Cup in 2014 – I was wondering why all businesses had their eyes firmly fixed on China and could not see a market that was right there, next to the United States.”
Brazil is already among the world’s largest luxury consumers, falling only behind China, Japan, the United States, France and Russia. Brazil also recently became the world’s fifth largest economy, overtaking France and the England. The number of very high net worth individuals in Brazil has also risen exponentially. Billionaires in Brazil in 2010 totaled 30, up 60 percent against 2009, having benefited from higher commodity prices and a stronger currency, according to Forbes.
Menkes said that businesses still lack sufficient knowledge to understand some specific characteristics of the Brazilian market and Brazil itself. Luxury groups such as Louis Vuitton or PPR know that, when choosing where to open a flagship store in Brazil, the key cities are always Sao Paulo first and then Rio. But recent studies show that economic growth in Brazil is opening up opportunities in other cities such as Belo Horizonte and Brasilia.
Many luxury groups long refrained from building a big business in the country, deterred by Brazil’s high import duties, complex bureaucracy and lack of retail space. But in the past few years, Gucci, Chanel, Burberry, Christian Louboutin, Diane von Furstenberg and other big names have opened shops in Brazil, lured by new luxury and the rising purchasing power of the country’s middle class.
Diane von Furstenberg’s shop, opened two years ago in the Iguatemi Center in Sao Paulo, ranks number 2 after her New York flagship store in terms of sales, the designer said at the Hot Luxury conference.
“I did not expect that,” Furstenberg told the Reuters Luxury and Fashion Summit in Paris. “Brazilians love life … Brazil is really an incredible market.”
The Brazilian consumer was described by Bernd Beetz, CEO of Coty, Inc. at the Global Luxury and Fashion Summit earlier this year as one “who loves beauty, loves fragrance, loves cosmetics. So we just have to figure out a way to get our brands to them.”
The 2012 edition of the IHT luxury conference will be held in South Africa.