Mumbai, Buy, Buy! - Spear's Magazine

Mumbai, Buy, Buy!

Like the maharajas of yore, India’s newly rich have a tigerish appetite for high-end Western luxury goods, says John Arlidge

Like the maharajas of yore, India’s newly rich have a tigerish appetite for high-end Western luxury goods, says John Arlidge

The triple-arched Gateway of India, on Mumbai’s harbour-front, is where anyone who is anyone arrives in the subcontinent. Royalty and rock stars step off their yachts or out of their limousines and push through the crowds of hissing eunuchs, legless pedlars, holy men and whores to the calm of the colonial Taj Mahal Palace and Tower hotel.

It is 10am on a muggy morning and Derek Carter, the boss of British luxury-yacht builder Fairline Boats, is bobbing about in the harbour in front of the ornate monument. He has travelled from his base in Northamptonshire to the Mumbai International Boat Show to convince India’s modern maharajahs that what they really need to keep up with the Mittals at Number 42 is a £1.75 million, 65ft Squadron cruiser.

From the crowds of bedraggled spectators lining the harbour wall, it hardly looks like a promising place to look for new customers. But Carter insists: ‘In the world of luxury retail, the globe’s centre of gravity is shifting east. We believe that elite consumers here will match their peers in LA and Moscow.’

At a party that night in the penthouse of the Taj Mahal hotel, Carter’s words begin to make sense. Among India’s upper middle classes there is a heady scent of new money, in spite of the global slowdown. Over the rosé champagne, financiers from JP Morgan discuss property prices with retail and real-estate entrepreneurs, while Bollywood stars wield diamond-encrusted Vertu mobile phones like weapons.

One local businessman, Remu Javeri, a 54-year-old local property multimillionaire and fashion retailer, says: ‘When I was growing up, the definition of luxury was biryani and beer. But now we have money. Gandhi would hate it but the view today is: “If you’ve got it, spend it.”’

It’s men like Javeri who are in the gilt-edged sights of every luxury-goods firm in the world. In the past two years every major British, French and Italian upscale retailer has booked a first-class passage to India.

The country’s first luxury malls are springing up around Mumbai, Delhi, Bangalore and Chennai, with boutiques and showrooms for Rolls-Royce, Bentley, Lamborghini, Aston Martin and Porsche cars and clothes and jewellery by Gucci, Dunhill, Burberry, Louis Vuitton, Versace, Chanel, Armani, Zegna, Hermès, Cartier, Bulgari, Dolce & Gabbana, Fendi and Dior. Brioni has taken the rare step of opening in India before setting up shop in China.

And Elizabeth Hurley is both selling and sourcing her own highly successful exclusive designer beach wear label in Mumbai where she also has a home with her Indian businessman husband Arun Nayer.
As ‘mature’ western markets are hit by slower consumer spending, India’s luxury-goods market is still growing. Indeed, some analysts say it could be the biggest in the world by 2020.

Indians will spend about £2 billion on luxury goods this year, according to AK Kearney, the management consultants, and that figure is expected to hit £15 billion by 2015. The 2007 Merrill Lynch World Wealth Report revealed that the number of US dollar millionaires in India is growing by 25,000 a year. The number of billionaires is now 36, up from 26 twelve  months ago — a higher figure than in Japan.

With the economy growing at 8 per cent, the middle class is expanding rapidly. In 2006 there were 1.6 million households earning £50,000 or more a year and spending £5,000 on luxury. This group is expected to grow by 14 per cent a year for the next decade. Personal consumption makes up a staggering 67 per cent of GDP, compared with 42 per cent in China. Only the US is higher at 70 per cent.

Indians may be enthusiastic consumers but, until recently, luxury goods firms were put off entering the market by the government’s deadly Fabian-style economics. Delhi’s decision last year to ease import restrictions and foreign-currency controls and to allow foreign direct investment of 51 per cent in single-brand retail operations — up from 49 per cent and, maybe, soon rising to 100 per cent — have prompted the sudden rush to market.

‘We wanted to open in India sooner but the economic structures were not conducive,’ says Italy’s one-man-brand, Giorgio Armani, whose first Emporio, Giorgio Armani and Casa (homeware) stores opened this year.

The Indian market has some big advantages over other emerging luxury markets, notably China. There is a rich tradition of luxury — thanks to the maharajahs. ‘A century ago the Indian elite was among the luxury brands’ biggest clients,’ says Yves Carcelle, chief executive of Louis Vuitton. ‘Western luxury brands disappeared in India for a while but the culture of luxury has continued.’

Like Hollywood, Bollywood creates huge demand for clothes, bags, watches and jewellery as cinema fans try to ape their favourite screen stars. Swiss watch and jewellery brand Chopard is harnessing the power of Indian cinema by draping the Queen of Bollywood, Aishwarya Rai — a  former Miss World — in diamonds.

Chopard hosted a Bollywood-themed party at this year’s Cannes film festival. ‘In Bollywood, fashion is always the leading lady,’ says Caroline Gruosi-Scheufele, Chopard’s boss.

Best of all, India’s population is highly educated and, thanks to successful, new local magazines such as Indian Vogue and Indian GQ, consumers are very savvy about western brands. ‘Indians are the biggest snobs in the world!’ says one leading Italian designer. ‘They only want the best labels.’

Nielsen Global Luxury Brands confirms that Indian consumers are among the most brand-conscious, with 35 per cent of them of them buying luxury brands. ‘Snobs? Us? Of course we are!’ laughs Mumbai-based financier Bharat Kewalramani. ‘We learnt that from you British.’

But brands will have to overcome a number of local difficulties if they are to win hearts and rupees. India has its own fashion and jewellery designers who have a strong local following. The diamond jewellery market alone is worth $5 billion a year, of which branded jewellery accounts for just 2 per cent by value, according to the British Luxury Goods Council.

‘Getting Indian women out of their saris is a tough challenge and we have got all the diamonds, emeralds and rubies here that we could ever need,’ says one local designer.

To overcome the problem, some brands are adopting an ‘if you can’t beat ’em, join ’em’ approach by producing their own brand of Indi-Chic. Recent catwalk collections by Gucci, Chanel and Dior have featured the tapered Indian churidar trousers and the classic Nehru jacket. Armani has incorporated oriental Art Deco and vibrant hues in his Casa collections. Hermès has created a new colour, Indian Pink, to add to its trademark orange.

Although important restrictions may have been lifted, ‘tariff raj’ import duties are still higher than most emerging markets — about 45 per cent on an expensive watch, compared with about 20 per cent in China, and rising to 100 per cent for luxury cars. High import duties also encourage smuggling.

When French giant Chanel set up one boutique in Mumbai, bosses discovered that, instead of selling his official Chanel-allocated stock, one local partner was importing Chanel products cheaply on the grey market, selling them at official prices and pocketing the difference.

The most overcrowded roads and airports in the world make it difficult to get products — and buyers — to market. ‘India has all the software — educated consumers — and none of the hardware — infrastructure,’ Armani says. There are no department stores and many of the new malls are not exclusive enough for top-notch brands. Zegna closed its first store in protest at the quality of local shopping centres.

There is also the social minefield of India’s caste system. When Mercedes-Benz opened a new showroom in Mumbai, the firm only sold a handful of cars in the first few months in a country where the three-pointed star is one of the most coveted status symbols. The firm had hired sales staff from a caste so lowly that upscale consumers did not want to talk to them, far less spend a small fortune.

And politics is never far away. Prime Minister Manmohan Singh recently criticised ‘ostentatious expenditure’. ‘Such vulgarity insults the less privileged and plants the seeds of resentment in the minds of the have-nots,’ he said.

Observers concede that buying a £500,000 Rolls-Royce Phantom — the firm sells one a month in India — when three-quarters of Indians survive on 25p a day poses a moral dilemma, to put it mildly, but they insist that ordinary Indians welcome rather than resent the very modern maharajahs.

Alex Kuruvilla, who used to run MTV in India and is now managing director of Condé Nast, publishers of Vogue and GQ, says Indians are creating their own version of the American dream: ‘People don’t resent wealth. They celebrate it and think that one day they, too, could “make it”.’

It certainly looks that way back on the flotilla of flaunted wealth in Mumbai harbour. A cheer goes up when a boat the size of a small country approached the marina where the Boat Show was being held. Whose could it be? Roman Abramovich? Larry Ellison? P Diddy? Standing on deck, a glass of the Kingfisher beer brand that he owns in hand, is Vijay Mallya, India’s flashiest billionaire.

His Kingfisher airline launched its first international route from London to Bangalore this August, and his United Breweries bought Glasgow-based whisky brand Whyte and Mackay last year. His personal and business motto is emblazoned on his boat: ‘You only live once, so live for the good times.’

Like it or loathe it, that’s the mood of modern India.



 

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