Is India finally ready for an explosion in the sales of luxury goods and services? Recent news reports and studies certainly suggest so.
A study by Wealth-X, a consultancy firm specialising in the luxury market, on "ultra wealthy individuals" estimates that there are 8,200 ultra-high net worth individuals (UHNW) in India with a combined fortune of $945 billion.
The Wealth-X study estimates that there are at least 115 billionaires in India worth a combined wealth of $195 billion. Notably, the study says, "some of these moguls become UHNW individuals within a few years of creating their initial fortunes."
According to the study, there are 6,150 Indians worth between $30 million and $100 million, and nearly 900 worth between $100 million and $200 million. Their combined net worth — at least $420 billion.
According to the report, there are at least 4,960 Non-Resident Indian (NRI) UHNW individuals with a combined worth of about $465 billion. North America has the highest population of NRIs worth more than $30 million, constituting about 38% of all ultra-wealthy NRIs. Europe is second, with approximately 21%, while the Asia-Pacific region follows close behind with nearly 20%. The Middle East is home to about 15% of the global UHNW NRI population. About 4% and 1% of the world’s NRIs reside in Latin America and Africa, respectively.
India's UHNW population is larger and worth more than the global UHNW NRI population.
If there are so many über rich, do the numbers translate into sales of the toys of the über rich as well? "Although the number of billionaires in India can't match up to those in other nations, this new rise in private jets will take India from the 18th position globally (in terms of private jet numbers) to the fourth position. Private jetmakers are targeting affluent Indians with their posh, lavish and exclusive private planes, considering the current scenario and the spending habits of the elite," said a Times of India reportin September 2011.
The private jet count is one area that India stays ahead of China. "As the ranks of the affluent increase in India, so too the numbers of private jets. The tally of private planes in the country is now 142 — up nearly 50 percent in three years. This is a fraction of the number in Western countries like the United States, but according to the global consulting firm, Frost and Sullivan, India has the maximum number of private jets in Asia - more than in China," says Voice of America.
The story goes beyond the obvious products and categories such as private jets and yachts and luxury cars – and beyond the obvious geographies. A Confederation of India Industry and AT Kearney Ltd report, interestingly, talks of the breadth of the luxury market. "The most marked trends are of new cities and catchments on the luxury map. Chennai, Hyderabad and Pune are now confirmed luxury destinations with several brands opening stores in these cities (Hermes, Paul & Shark, Diesel, Canali, Tumi etc). Stores in cities beyond Mumbai, Delhi and Bengaluru now account for 23 percent of the stores. In addition, new catchments in Mumbai (North Mumbai/Juhu) and Delhi (Gurgaon) are becoming popular destinations for luxury. This is where the future of the luxury market lies."
Wharton University too sees a boom in the luxury market. "Indians, after having been deprived of everything for so long, are in this great frenzy to consume luxury brands and pamper their senses. The mindset has changed from being frugal and living within their means to much more 'Let's have a life," says Sanjiv Gupta, director of the public sector telecom service provider Bharat Sanchar Nigam and former president and CEO of Coca-Cola South Asia, quoted in the study.
For this reason, Gupta is extremely optimistic about the future of luxury brands in India and predicts that there will be a significant luxury segment in almost all categories — everything from alcohol to kitchens to services. "I think this market will surprise us all,” he said. "Every category now has to plan for a significant luxury segment. That's vastly different from five years ago, when every marketer was just chasing the mass market," the study goes on to say.
India is creating the UHNW individuals, the luxury brands are here, as is the retail infrastructure. Is the appetite to buy these goods and services here, has been the billion dollar question. According to studies by the CII, AT Kearney, Wharton and news reports, the answer is 'yes'.