Indian Luxury Goods Market Poised for Growth

If you thought doing business in the Indian market was all about volumes, think again. A number of recent international studies have focused on the enormous potential of the high end luxury goods consumer, which is why today more and more international brands are setting up shop in the country.

The "India Luxury Trends 2006" report from KSA Technopak for example, estimates the potential of the luxury segment of 1.6 million high-income households with an earning capacity of Rs 4.5 million (approximately $1 million) annually to be $444 million. The number of such high-net worth households is believed to be growing 14 percent annually, with a yearly expenditure of $9,000 on luxury goods.

Similarly, the first Asia-Pacific Wealth Report published by Merrill Lynch and Capgemini puts the figure of High Net Worth Individuals (HNI) - people with net financial assets of at least a million dollars, excluding their primary residence and consumables - in India at 83,000 in 2005, a rise of 19.3 percent over the previous year.

According to the report, this was the second highest growth rate among all countries and markets globally. The assets held by Indian HNIs were valued at $290 billion, representing 3.8 percent of total Asia-Pacific HNI wealth.

Another study, the 2006 AC Nielsen Global Consumer Confidence Index (CCI) report, puts India at the top of 40 countries in Asia-Pacific, North America, and Europe, and it does so for the third time in a row since CCI started being tracked in early 2005. 

The total retail market in India is believed to be just over $200 billion, and this is growing at a compounded annual rate of 30 percent. An A T Kearney study of the of growth at the high-end is revealing: the luxury watch market is growing 40 percent annually, branded jewelry at 40 percent, luxury cars at 50 percent, wine at 30 percent and international travel at 35 percent.