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Indians are richer than you thought
Prerna Raturi
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April 25, 2006

Sitting back in the butter-soft leather seat of her Cessna jet, in which I am a fractional partner, I rummage inside my Louis Vuitton bag for my Sir Henry Tate Mont Blanc pen and sign my sister's birthday card.

A sip of Dom Perignon later, I slip my feet out of burgundy Chanel stilettos and decide to take a nap before the jet lands in Mumbai, where I will attend the launch of the new product line by Moschino.

Oh, all right, I admit that would be a fantasy-come-true. But I'm not alone in dreaming about such a life: every luxury brand in India is right there with me, wishing it were real. It may be a little while before I live out that particular dream, but meanwhile their prayers certainly seem to be getting heard.

According to a recent report on the affluent Indian consumer by Technopak Advisors' The Knowledge Company, there are one million luxury consumers in India, and the figure is expected to treble by 2010.

The 2001-02 Household Income Survey by the National Council of Applied Economic Research says that by 2010, there will be 140,000 households with an annual income of more than Rs 1 crore (Rs 10 million) -- and the city with the most crorepatis is not Mumbai or Delhi, or even IT-driven Bangalore, but Nagpur.

Which should be great news for the international upscale brands now in India - here's overwhelming proof that there can be life for them outside the metros.

But don't uncork the bubbly just yet. The report by The Knowledge Company adds a not-so-encouraging fact: there may be 1 million luxury consumers in India, but there are actually as many as 8-9 million people who can afford these pricey products - but they don't.

So what are luxury brands doing to sell in Nagpur and Surat (another millionaire-riddled city), convert those-who-can-afford-but-don't-buy into die-hard followers of their products?

In small doses

"The primary reason for people not buying luxury goods even when they can afford is that they can't relate to a luxury brand," explains Saloni Nangia, associate director, Technopak Advisors.

The first step, then, is self-explanatory: teach potential customers about the brand's heritage. Most luxury brands pride themselves on their pedigree - by educating buyers about the lineage, they also invite them to become part of it.

Which is why luxury wine and spirits company Moet-Hennessey is all for events such as cognac appreciation programmes, champagne/ wine evenings and lunches, and malt whisky experience sessions.

"To make the products accessible," says Ashwin Deo, managing director, Moet Hennessey India, "we have arrangements with five-star hotels and select restaurants to serve wines and champagne by the glass."

The pure-bred snobs may turn up their noses at the practice, but this is an accepted way of helping consumers graduate to buying full bottles; it's not such a huge leap from Rs 800 for a glass to Rs 5,000 for a bottle.

Some wines are also being sold as half-bottles. Even the best wines go off if they're not consumed within a couple of days of opening the bottle, and given that wine drinking is still not widespread, this is an economical way of popularising the habit.

Bite-sized bait works for Club One Air as well. The company, which sells fractional ownerships in aircraft, offers a Jet Card through which customers can purchase in advance a fixed number of flying hours, based on their assessment of their needs.

Given that, an hour's flying on Club One can set you back anywhere from Rs 125,000 to Rs 195,000, this is a "cheaper" way of trying the service. "It also works well for those who don't fly as frequently," says Club One Air managing director Manav Singh.

Apart from regular mailers and interaction with the design fraternity (the serious buyers), crystal company Swarovski India communicates in an old-fashioned way, too: through its magazine, Crystallized. From fashion trends and predictions, the monthly features the world's top designers, style gurus, brand managers and the latest looks in Swarovski crystals.

For Bang & Olufsen, the luxury home entertainment systems company, a visit to its stores and experiencing the systems means a lot. At the same time, the company caters to customers by sending its executives to customers' homes - anywhere in India - and help them in setting up its systems.

The wow factor

Luxury brands may be all about being niche, but they still need to create a buzz in the right circles. Which means speaking to the people in a language they understand. Luxury luggage-maker Louis Vuitton, for instance, invites its top clients to small, exclusive cocktail parties where new product lines are showcased.

Fashion line Chanel's India launch, on the other hand, was all about making a statement. Models were flown in from Paris, the lawns at Delhi's Imperial Hotel were redesigned and the ballroom converted into a seemingly-impromptu catwalk where everything was about the French haute couture label.

At the same time, holding such events also means brand building for a particular product. Across the world Tag Heuer, the high-end watch brand from LVMH Watches and Jewelry, is linked with upmarket sports such as golf, polo and sailing.

It has continued the association in India as well, organising at least two to three golfing events every year; last December, it combined glamour and golf at a "gala" in Goa.

A critical ingredient that determines the success of these events is the wow factor. Chanel's launch had it, so did the Louis Vuitton celebration during the recent Fashion Week. With the Qutub Minar as the backdrop, the party was a winner just on location.

Some luxury brands, though, realise that you can have too much of a good thing. After all, how many new ways are there of serving champagne and caviar? That's when they move the party to private homes. The celebrity host adds just a novel touch of at-home glamour.

The page-three connection

That's not the only way luxury brands leverage the celebrity connection. Brand ambassadors have become almost a hygiene factor for many upscale products.

"Celebrities help in giving a face to a brand - they are meant to epitomise all the values and beliefs that are intrinsic to the brand," says Renuka Keron, marketing manager, LVMH Watch and Jewelry.

Celebrity endorsements are a hugely popular way of showcasing luxury brands in Western markets, and the trend is fast catching up in India, too. At various times in the past few years, Bollywood stars have acted as ambassadors for international watch brands: Sushmita Sen (Tag Heuer), Aishwarya Rai (Longines), Twinkle Khanna (Movado), Sonali Bendre (Omega).

Now, Italian apparel brand Moschino has model-actor Katrina Kaif promote its line, while Pooja Bedi flaunts the same label on her television show.

LVMH also adopted another route for Tag Heuer: it presented the watch to high-profile Indians who demonstrate the brand's core values: push your limits. That means people like composer A R Rehman and Olympic medallist Rajyavardhan Singh Rathore.

"Involving people with the right connections creates strong word-of-mouth, something these brands thrive on," says a marketing expert.

At the other extreme is Louis Vuitton. "For us, the brand is the star," declares Tikka Shatrujit Singh, advisor, Louis Vuitton. "We don't think one person can personify our products."

That attitude also lends more exclusivity to the brand, according to Singh. Which is why, even though actor Uma Thurman may appear in a print campaign for a Louis Vuitton bag, she is portrayed as only a user of the product - her celebrity status is almost immaterial.

That's a line of thought Technopak Advisors Chairman Arvind Singhal agrees with. "Having brand ambassadors endorse your brand is taking a huge risk. It also suggests that your own brand is not powerful enough."

Going glocal

Chanel hasn't signed on an Indian brand ambassador, but Indian sentiments are clearly a high priority for the label. Even the India launch was carefully timed, points out Xavier Bertrand, managing director, Chanel India: "Just before Diwali, the biggest Indian festival."

Also, as Technopak's Nangia observes, "For an Indian, there's more to ethnic clothing than western clothes; so only a small segment will spend on western apparel and accessories."

Chanel recognises this perfectly: even though its apparel range is completely Western, the accessories portfolio has been carefully chosen to compliment Indian clothing.

Then there are the smaller towns (remember Nagpur and Surat?). Luxury car maker Audi recognises the wallet power of the B- and C-class towns. Audi is opening a showroom in Bangalore later this month, but it is looking much further afield for potential customers: car melas will be organised in Coimbatore and Hospet.

Additional inputs: Priyanka Joshi

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