Indians turn to a life of
luxury By Arun Bhattacharjee
NEW
DELHI - As India's consumer society matures, urban men
and women are steadily changing their habits and buying
more-expensive discretionary items. Men, for instance,
are increasingly competing with women for facials,
manicures and remakes in the unisex saloons, and former
whisky-drinking males and females are more frequently
turning to wine.
LouisVuitton Hennessey Moet
(LVMH), Chanel and Hugo Boss are becoming household
names. The discerning Indian pallet has rejected
Kentucky Fried Chicken in favor of Tandoori Chicken,
which is becoming an India brand. Coca Cola has
withdrawn its much-hyped energy drink "Shock" from the
market and given an ultimatum to its Indian marketing
staff that unless brands click within three years they
would be withdrawn.
The catchphrase today is
thus not mass market, but niche market. American and
European big names are opening their own outlets instead
of selling their products through the mushrooming malls
and supermarkets in India. "Let them come to us instead
of buying our products off the shelf so that specialists
can brief them about our products and establish a
permanent relationship with the customers," says a LVMH
executive.
No wonder the super brands in skin
care and perfume such as Christian Dior, LVMH, and
Channel & Hugo Boss are already in India with their
own outlets. Estee Lauder, Clinique and Lancome are
seeking to lure elite Indian women and fashion-conscious
men. Their target, says an analyst from the ORG-MARG
market research firm, is 54 million urban men and women,
which is barely 4 percent of India's present population.
He feels that comfortable foreign exchange
reserves, free travel and exposure abroad by educated
Indians have a lot to do with developing the niche
market that the foreign brands are looking for.
The other reason cited is India's information
technology revolution and the generation of young
technocrats with money to spare and status to maintain.
Available statistics bear this out, showing that sales
of well-known cosmetic brands and wine consumption are
highest in Bombay because of its rich business groups
and the film industry. Delhi, with the diplomatic corps
and upcoming professionals is next. In Bangalore even
conservative vegetarian South Indians have taken up
wine-bibbing. Sales of such consumer discretionary items
are expected to grow by 33 percent next year and are
showing average growth of 22 percent annually.
The wine business should have posted higher
growth if the government had cut import duties. In a
five-star hotel, a bottle of good Chardonnay costs
around US$50, of which luxury and other taxes account
for 65 percent. Yet 35,000 to 40,000 cases of wines such
as Chardonnay were sold last year. The fledgling Indian
wine industry, which produces a half-dozen brands, is
not far behind. Last year they sold more than 185,000
cases of table wines.
A Finance Ministry
official says that India is unlikely to reduce either
duty or taxes on liquors and beverages as, like tobacco,
they are major sources of revenue. In India all brands
of whiskey and hard liquors carry maximum duty and
breweries and distilleries have to take government
licenses.
There is also a growing awareness of
national products. Even Indian women who prefer
skin-whitening cosmetics are favoring Indian brands and
herbal products and rejecting foreign goods. Indian
cosmetic producers of Lakme brand, now owned by
Unilever, and the Biotique brands are challenging the
foreign products. Even Baskin & Robbins, the
American ice cream purveyor, has joined hands with
Kuality brand from India. Mother Dairy, which started as
a cooperative venture and became a quality producer of
ice cream and chocolates, is posing a major challenge to
Cadbury.
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Nov 21, 2003
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