, LVMH's group president, South-east Asia, South Asia and the west Asia, is upbeat about the possibilities that exist for luxury, both the homegrown variety and the international brands that are coming to India. In this conversation with Archana Jahagirdar, he talks somewhat guardedly about LVMH's plans of buying into Indian fashion-designer brands in the future and the road ahead for the luxury segment in this fast-emerging economy.
You work for a large luxury group which has brought several luxury brands into India. However, the perception is that "luxury" is ill-understood in this country. Can you define the word luxury?
Each person has his own definition of luxury. For me, it could be the luxury of spending time with my kids. However, to define it, I would say that luxury products and services are something that are of premimum value.
But even this definition differs from country to country. In India, premimum value would differ according to product category. Here value doesn't have to be just in monetary terms but it could be about exclusivity, or if the product is edgy.
How big is the luxury market in India?
The market is quite developed for Indian luxury products like jewellery, clothes, and so on. The size of the market for international products would be around $400-500 million. For domestic luxury brands, the market size would be about $3 billion. International luxury brands are much smaller right now.
Is LVMH then looking to tie up with or buy into an Indian designer-wear brand?
We are certainly looking at the possibility of working with Indian designers. It could be a designer working with us to create a product or it could be knowledge exchange.
But there are persistent rumours that LVMH will be pumping funds into an Indian fashion brand?
L Capital, the private equity fund sponsored by LVMH but not owned by us, is being set up. This fund will look at various categories and Indian designer wear is one of them. We have met almost all the leading Indian designers.
They are all very creative but what they lack is the commerce side of the business. They are under-leveraged in terms of the revenue they can generate. The potential is much, much bigger. Indian designers are a huge opportunity for India as well as for the international market. They are incredibly talented.
The lack of a corporate structure is one of the reasons cited for the lack of private equity flowing into Indian fashion. How do you view that?
For us the lack of structure is an opportunity. That is the value we add. Private equity works well when someone is not so well established. We will engage in serious discussion with fashion designers in the first quarter of 2008.
What kind of size can these designers grow to given that the entire Indian fashion industry is said to be worth about Rs 500 crore?
The top five Indian designers could each be the size of Rs 500 crore. Designers like Shahab Durazi, Rohit Bal, Tarun Tahiliani, Ritu Kumar, Raghuvendra Rathore are very talented.
Their penetration is still very low, so they could multiply their reach many times over. You can be exclusive and still have a very healthy bottomline. Louis Vuitton (LV) is an example of that.
Some would say that LV has become somewhat common with everyone carrying the LV logo bags. Your comment.
In India the penetration rates are minuscule for international luxury brands, compared to Japan. The media, which talks about luxury, moves in a small microcosm but the market is bigger than that microcosm.
LV is a fantastic brand; it's not just about a fashion statement but it delivers fantastic value. With that the brand can go much deeper. In India the trickle down hasn't happened.
