(Source: LuxuryBrandNetwork.com)

Newly-released projections by consultants at Bain & Co. suggest that 2009 is shaping up to be "probably the worst year for luxury goods consumption in recent memory."  They predict that global growth in luxury spending will fall to just 3% in 2009 compared to 6.5% growth in 2008 and 9% in 2007.

Bain believes emerging markets will provide a "buffer" of growth for luxury players.  They currently estimate China as a $4.5 billion market that will grow at 30% over the next five years.  Russia is pegged at $3.6 billion, growing at 20% over the next five years.  Brazil is estimated to be a $1.3 billion market but has the highest growth potential at 35% for five years.  India is measured at $0.4 billion, growing at 25% over five years.

Bain believes that in 2009, for the first time, currency fluctuations may have a positive impact on market growth.

Despite the current slowdown, Bain is still optimistic about the long-term future of luxury.  They cite multiple long-term positive drivers for the industry, including increasing personal wealth around the globe, continuing democratization (which grows the aspirational consumer base), continued GDP growth over the long-term and growing spending by women.

(Posted 4 Nov 2008)