Brand Finance has recently published its annual report, “Luxury & Premium 50 2021,” which examines the impact of the ongoing health crisis on luxury brands. According to the report, the value of the top 50 luxury houses has declined by 3%, resulting in a total loss of $7.6 billion. In 2020, these brands had a combined value of $227.1 billion, but that figure dropped to $219.5 billion in 2021.
The decrease in value can be attributed to various factors, including store closures, disrupted commercial relationships, and the absence of tourism. However, there is reason for optimism as the pandemic has the potential to drive change in the industry. The rise of e-commerce channels and brands’ responses to growing consumer demand for social and sustainable action can be seen as positive developments, according to Alex Haigh, Director of Brand Finance Evaluation.
While there has been an overall decline in value across the ranking, some brands have managed to outperform their peers. Porsche, with a value of $34.326 billion, takes the top spot in the Top 50. The luxury car brand saw a 36% increase in sales in the first quarter of 2021, contributing to its dominant position with a 1.2% growth in value. Gucci, valued at $15.599 billion (down 11.5%), and Louis Vuitton, valued at $14.858 billion (down 9.8%), follow Porsche, maintaining their positions from the previous year.
Chanel has climbed to the fourth position, despite a 3.4% decrease in value, surpassing Cartier, which experienced the largest decline among the top ten companies. Cartier’s value dropped from $15 billion in 2020 to $12 billion in 2021, a decrease of 19.5%. While apparel and accessory brands dominate the ranking, accounting for 62% of the total value, their performances vary significantly. Coach fell three places due to a 31% decrease in value, Bottega Veneta dropped eight places to 36th, and Salvatore Ferragamo fell six positions to 42nd.
On the other hand, Céline experienced the “fastest growth,” jumping 13 places to reach 34th place with a 118% increase in value amounting to $1.5 billion. This year, several brands made their debut in the ranking, including Japanese cosmetics brand Pola, Kenzo, and Ralph Lauren. Additionally, for the first time ever, two hotel brands, Shangri-La (29th) and Intercontinental (35th), have made their appearance in the Top 50.
Despite the majority of brands in the “Luxury & Premium 50 2021” experiencing a decline in value due to the pandemic, Brand Finance emphasizes the resilience of the luxury industry. With travel restrictions limiting international luxury revenue to 20-30% in the past, brands have shifted their focus to local customers. This presents an opportunity for luxury brands to redefine their priorities and cater to the growing appreciation for local consumer products resulting from the pandemic.
Furthermore, Brand Finance highlights the evolving needs and expectations of the public, particularly among younger generations who will soon become the majority of luxury customers. There is a growing desire for transparency and sustainability, which presents the industry with an opportunity to showcase innovative capabilities such as recycling and eco-friendly textiles, as well as second-hand programs.
Useful links:
1. Brand Finance – Luxury & Premium 50 2021
2. Forbes – Porsche Overtakes Louis Vuitton, Gucci, and Hermès as World’s Most Valuable Luxury Brand
