Luxury Firms Lavish Even More Attention on the Ultrarich
March 15 2017 - 2:39PM
Dow Jones News
By Matthew Dalton
Paris
An elegant stone façade just off the Champs Élysées hides what
may be the world's most elite liquor store.
Spirits maker Moët Hennessy has turned a Parisian apartment into
a discreet, invitation-only boutique for its best clients and those
of its parent, luxury giant LVMH Moët Hennessy Louis Vuitton.
Decades-old bottles of limited edition Dom Pérignon champagne,
costing thousands of dollars each, lie in a temperature-controlled
closet made of crystal glass. A display case holds massive "
Nebuchadnezzar" bottles of Cheval Blanc, each containing almost
four gallons of the ultraexpensive Saint-Émilion wine.
The apartment, opened a year ago, is part of an intensifying
effort by luxury firms to pamper their best-heeled customers,
hoping the ultra-rich can bolster growth amid a cloudier
outlook.
For years, the luxury industry relied on Asia and globe-trotting
shoppers from China's emerging upper middle class to fuel annual
growth rates of @sudeepreddymore than 10%. But Chinese policies to
keep shoppers from spending large sums overseas, combined with
terror attacks in Europe, have hit the industry hard. Global luxury
spending didn't grow in 2016, the first such stall since the
world-wide financial crisis.
Some of that pressure has eased as terror fears have ebbed, but
sales growth this year is expected to be just 2% to 3%. Amid that
new normal, luxury firms are conjuring up ever-more-extravagant
perks to woo the super-wealthy.
This clientele isn't the 1% of the world's richest people. It is
the top 0.1%, a group that already makes up a disproportionate
percentage of sales for the industry. According to research firm
Wealth-X, an even more rarified group -- the roughly 211,000 people
around the world with individual net worth of more than $30 million
-- account for about 19% of total luxury-market spending. Their
wealth is expected to surge in the coming years, growing 9%
annually through 2020, Wealth-X says.
"This VIP-management side of the business is getting more and
more important," said Luca Solca, luxury-industry analyst with
Exane BNP Paribas. "A happy few are doing really well."
Harrods, the swanky London department store, has private areas
akin to hotel suites that wealthy clients can rent for their
entourages. Customers can hire chefs to cook meals for powering
through day-long shopping sprees.
High-end menswear firm Stefano Ricci flies its tailors to
clients around the world to make custom suits. Each suit costs
between $10,000 and $20,000, and customers are expected to purchase
at least five for a tailor to make the trip, says Filippo Ricci,
the family-owned company's creative director. The Ricci family
recently opened a country house near its headquarters in Florence
where it hosts top-spending clients, even allowing them to drive
the family's collection of vintage cars.
"Our mission is to maximize the feel-good factor of these
people," said Thomas Mesmin, who started a company that designs
specialized shopping trips to Paris for the ultrawealthy. "We want
them to be in the perfect mood to buy products."
Luxury firms hope brand loyalty nurtured among these influential
consumers will spread to their social circles and eventually
trickle down to the broader public.
"The impact is much more on the desirability of the brands and
the image of the company than purely financial," said Marc
Fourcade, private-sales manager at Moët Hennessy, who conceived of
the Paris apartment.
At a starting price of roughly EUR15,000 ($16,000), clients can
spend a few hours dining and sampling Moët Hennessy wines and
Cognacs. The bill can soar from there.
A personalized barrel of Château d'Yquem, a renowned sweet wine,
goes for EUR100,000. The barrel contains the equivalent of 300
bottles. That amounts to something of a bargain for wine from an
estate that has produced single bottles selling for more than that
sum.
The boutique's sleek interior, designed by Bruno Moinard, has
custom-made furniture. For dinner, Moët Hennessy can arrange for a
celebrity chef to cook for up to 12 guests.
The apartment's liquor storeroom is stocked with Moët Hennessy's
brands: Dom Pérignon, Krug, Veuve Clicquot, Château d'Yquem, Cheval
Blanc and Ao Yun, a new Chinese wine from an estate in the
Himalayas. A closet holds a limited-edition Cognac, Hennessy 8,
made to commemorate the master blender's handover of the keys to
the house to his nephew. It comes in a crystal bottle inside a
personalized case. The price for a liter of Cognac? Mr. Fourcade
says Hennessy has been selling the bottles for tens of thousands of
dollars each.
Write to Matthew Dalton at Matthew.Dalton@wsj.com
(END) Dow Jones Newswires
March 15, 2017 15:24 ET (19:24 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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