Diversification into luxury goods
Agenda
• Luxury Industry
• Moet Hennessy Louis
Vuitton - LVMH
• SWOT
• Competitor Analysis
• Short& long
Recommendations
Luxury Goods Industry
What is Luxury?
Luxury Goods Industry – History
Luxury Goods Industry – Current
What is Luxury?
Definitions…
If everyone owns a particular brand… by definition it is not luxury
Luxury is associated with high price, or high quality
Luxury is about the quantity of expensive goods
Luxury is derived from unique craftsmanship & technical superiority
Luxury is to project certain social status or wealth
Luxury is to satisfy an emotional desire for subjective intangible products
Luxury Goods Industry - History
• 18th Century – viewed as the beginning of luxury
history in Europe
• For centuries, luxury goods industry which has
been controlled by the family business provides
services to the most affluent sectors of society
• In recent years, for the wave of acquisitions,
most of these family-run enterprises were
merged by the Commercial giant
Luxury Goods Industry – Global
•
Before the 1990s
Global luxury industry kept 10% -20%
of the unconventional speed
development, and created a 250 billion
US dollars on the global market
•
2000, the industry began to turn
constantly troughs period
•
Since 2000, the global luxury goods
market in a state of contraction
•
2004 luxury industry profit has
declined 35.7%.
•
2006 Global sales of luxury goods rose
10 percent to a record 150 billion
Luxury Goods Industry - Current
• Consumer consumption rates – based on
global market share
luxury goods market share in the global
distribution
14%
41%
12%
16%
17%
Japan
America
Europe
China
Others
The Group is active in 5 Sectors
Perfumes
& Cosmetics
Watches
& Jewelry
Fashion&
Leather
Goods
Selective
retailing
Wine
& Spirits
1743
1743
1854
1743
1854
1860
1743
1854
1860
1947
1743
1854
1860
1947
1961
Bernard Arnault
+ 1987=
LV
L
=
> 64,000
6
employees
1,700
= >stores
+
=
+
> 60
Prestigious
brand
+
=
+TODAY
worldwide
>$ 17
billion US
Revenue
+ Future
=?
Swot Analysis
Strength
• -Powerful and prestigious brand portfolio
• -World renowned
• -Powerful distribution capabilities
• -New product launches
• Wines and spirits
Moët & Chandon; Hennessy;
Louis Vuitton, Kenzo, Givenchy, Fend
Christian Dior, Guerlain, Parfums Givenchy
Dior, Fred, Omas, TAG Heuer
DFS Galleria, Miami Cruiseline Services, Sephora, Le Bon Marché
Weaknesses
• -Selective Retailing division continued poor
performance
• -Higher exposure to US Dollar than its peers
• -Weak sales performance
Opportunities
•
•
•
•
-A change in investor’s perception
-Expansion into new countries
-Product diversification
-Advertising impact
Threats
•
•
•
•
-Champagne production
-Price deflation
-Economic cycle
-Imitators
Swot Analysis
Strength
• -Powerful and prestigious brand portfolio
• -World renowned
• -Powerful distribution capabilities
• -New product launches
• Wines and spirits
Moët & Chandon; Hennessy;
Louis Vuitton, Kenzo, Givenchy, Fend
Christian Dior, Guerlain, Parfums Givenchy
Dior, Fred, Omas, TAG Heuer
DFS Galleria, Miami Cruiseline Services, Sephora, Le Bon Marché
Weaknesses
• -Selective Retailing division continued poor
performance
• -Higher exposure to US Dollar than its peers
• -Weak sales performance
Opportunities
•
•
•
•
-A change in investor’s perception
-Expansion into new countries
-Product diversification
-Advertising impact
Threats
•
•
•
•
-Champagne production
-Price deflation
-Economic cycle
-Imitators
Competitor
• Remy Cointreau
• PPR ( Pinault-Printermps-Redoute)
• Prada
• Richemont
Remy Cointreau
• Founded: Merger of Remy Martin(1724)
and Cointreau(1849), France, 1991
• Products: cognac, wines, rums, liqueurs,
champagnes
• Sales (mil.) in 2006: $963.9
• Net income (mil.) in 2006: $89.2
• Employees: 1346
Advantage
• Customer loyalty
• The decision to regain control of worldwide
distribution
• Increase brand awareness and market
leadership
PPR(Pinault-PrintempsRedoute)
•
•
•
•
•
Founded: Francois Pinault, France, 1963
Sales in 2006 ( mil. ): $23,656.2
Net income in 2006 ( mil.) : $965.9
One year net income growth : 42.2%
Employee in 2006 : 78,453
Gucci
• Subsidiary of PPR
• Founded: Goccio Gucci, Italy, 1921
• Products: cosmetics, shoes, perfumes,
Leather fashions, watches
Advantage
• Marketing strategy
• Strategic deployment
• Designer
Prada
• Founded: Mario Prada, Italy, 1913
• Products: costumes, hand bags, suitcases,
watches, perfumes
• Company type: private
Advantage
• Designer
• Marketing strategy
• Brand strategy
Richemont
• Founded: Anton Rupert, Switzerland,
1988
• Products: jewelry, watches, leather
goods, pens
• Sales in 2006 ( mil.) : $ 5,201.9
• Net income in 2006 ( mil.) : $1,323.4
• Employee: 16,400
Short Recommendation
• Customer Service – providing better
service to customers to keep them
• Company growth – serving consumers (i.e.
starbucks)
Long-term
Recommendation
• Piracy & counterfeit – competition between
the real and fake products
Long-term
Recommendation
• Focus On Potential Market
(i.e. Asia Market)
luxury goods market share in the global
distribution
14%
41%
12%
16%
17%
Japan
America
Europe
China
Others