Bernard Arnault started the year as one of the world’s largest fortunes, thanks to his luxury fashion empire that includes brands such as Louis Viutton, Dior, Tiffany & Co, Moët & Chandon, Dom Perignon and Tag Heuer. The sum of factors such as the decrease in luxury consumption in China or the cooling of luxury goods consumption after the pandemic will shake the entire industry in 2024. As a result of this decline, Bernard Arnault suffered further losses. 52,000 million in recent months.

But the entire luxury industry is not in trouble. In fact, a report by the consulting firm Bain & Company highlights that there is an ultra-luxury sector that has recorded the best data in recent years: yachts, supercars and private jets.

Slowdown in luxury consumption. According to the data of the Bain & Company report, the luxury industry showed signs of slowing down in 2024 with the growth of luxury fashion products after the pandemic. Global spending on luxury goods is expected to reach almost €1.5 trillion in 2024; This represents an estimated annual growth rate of -1% to 1% compared to 2023.

About a quarter (363 billion) of all this spending in the luxury sector consists of clothing, bags, glasses or perfume. “Facing macroeconomic uncertainty on a global scale and persistent price increases across brands, luxury consumers are reducing consumption of discretionary products,” emphasizes Claudia D’Arpizio, partner at Bain & Company and head of Fashion and Luxury Consulting.

“Millionaires” crisis in China. China is one of the main markets for luxury brands. China and Asian markets represent 31% of the total revenue of Bernard Arnault’s luxury business group, according to LVMH’s annual results.

The Chinese real estate crisis and the resulting credit crisis have caused a “massive extinction” in the number of millionaires in China, as reflected by the Hurun Millionaire Index. This uncertainty caused millionaires and the richest sectors to limit their consumption of imported luxury goods. “50 million luxury consumers chose or were forced to leave the luxury goods market in the last two years. This is a signal to brands that it is time to recalibrate their value proposition,” notes D’Arpizio. One of the authors of the report.

alcohol accident. Being a group with such a wide range of luxury products allows us to observe LVMH data as a thermometer of the luxury sector, since its different parts leave a fairly clear picture of which sectors are more or less affected by the decline in price consumption. of luxury products. In the case of the Arnault family business, wine and spirits recorded an 8% decline in the first three quarters of 2024.

According to data from the Bain & Company report, this market represents total sales estimated at 99,000 million units annually, but the price scale has subdued such products, leaving them beyond the reach of aspirational customers. Added to this is the arrival of Generation Z, which has less habit of consuming alcoholic beverages. According to a report by UK consultancy KAM, 65% of Gen Z young people in the UK prefer to limit their alcohol consumption to designated events and celebrations.

Sleep more than ever. Yachts have always been associated with millionaires and huge fortunes. However, the isolation and need for privacy that the pandemic brought to the table caused many wealthy customers to want to own their own yacht. This triggered the demand and it still maintains its momentum. According to data provided by The Superyacht Group EconomistWhile approximately 6,270 yachts were registered worldwide in 2021, the number of such ships is expected to exceed 7,000 by 2032. In the Balearic Islands alone, this sector carries a business volume of over 1,000 million dollars.

high flying luxury. According to Statista’s data, the private jet market will reach 19.14 billion dollars in 2023, corresponding to an annual increase of 3.34% and has been growing at this rate since 2022. Legislative changes due to environmental issues encouraged millionaires to renew their private jet fleets. 764 aircraft are planned for delivery in 2024.

Super sports and super tuned cars. Another sector that the luxury goods crisis did not reach is luxury automobile manufacturers, which maintain an increasing trend in sales volumes. Ferrari sales data shows that the number of vehicles shipped has nearly doubled in the last decade. While it sent a total of 7,664 units to its distributors in 2015, it grew in all markets except China with 13,663 units in 2023.

However, what is most remarkable is not just the increase in sales of these luxury supercars. Manufacturers have managed to make the most of every sale by offering customization alternatives that increase the final purchase price. According to Alessio Soligo, Lamborghini’s sales manager for Southern Europe, “Every customer wants his kit to be personalized. Above all, for supercars, customers want to personalize their cars, and Lamborghini offers them a wide range of possibilities to achieve this.” Its price can double its original price as it becomes a special unit.

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Image | Ferrari, Princess Yachts, Gulfstream