Rising in the East: Asia-Pacific consolidates its position as largest regional luxury goods market

Indeed, in 2010, Asia-Pacific accounted for 36% of the global luxury consumer goods market, followed by Europe at 35%, Americas at 26% and 4% for 'other' regions (including the Middle East, Africa and India). In 2011, Asia-Pacific grew share further, to account for 38% of the market. Europe's share of the global market dropped to 33% and the Americas to 25%. Meanwhile, 'other' regions grew share from 3.8% in 2010 to 4.4% in 2011. In absolute terms, double-digit revenue growth was seen across all four regions (Europe, the Americas, Asia-Pacific and 'Other'), but Asia-Pacific's growth, in excess of 20%, overshadowed that seen in Europe and the Americas.

Paul French, chief China market strategist at Mintel, said:

"In Europe, much of the growth in luxury goods sales in 2011 can be attributed to tourist spend, particularly from Russia and Asia-Pacific, underlining that Chinese luxury-goods consumers encompass two markets: domestic and overseas. Due to high taxes on luxury goods in China and greater global travel opportunities for Chinese citizens, those PRC shoppers desiring luxury goods are increasingly purchasing abroad effectively 'arbitraging' their purchasing internationally. As travel grows, it is now not just the usual overseas luxury purchasing destinations for the Chinese. Hong Kong, Macao and Singapore are all benefiting, but a host of luxury retail destinations including the UK, France, Australia, Japan and now, as visas become more readily available, the USA, are all standing to benefit too."

Overall, the global luxury consumer goods market (excluding consumables and automobiles) grew by 14% in 2011 and came within a whisker of €200 billion at retail selling prices. Demand was particularly strong from emerging markets and especially Asia-Pacific, in particular mainland PRC. In spite of the macroeconomic context, Mintel forecasts market growth of 11% at rsp for 2012, although it expects rates to slow in the following two years to nearer 6%.

Looking at specific categories, the watches and jewelry category outpaced the total luxury goods market again in 2011. The strong growth recorded in this category in 2010 was buoyed by the weak comparatives of 2009 – yet the same rate of growth was recorded in 2011, with a second consecutive 23% surge in the watches and jewelry market size. Despite softening economic growth in China and other emerging markets and the bleak European context, there is little sign of this category slowing, as shown most evidently in key high-end watch buying and collecting markets such as Hong Kong. Mintel expects this category to defy the macroeconomic context and post growth of around, or in excess of, 20% across 2012.

Fashion and leather goods—and particularly the leather goods element—consistently outpaced the overall luxury goods market over the review period, and weathered the 2008/09 storm with much more resilience than the watches and jewelry category. But the growth in the market for fashion and leather goods slowed from 20.6% in 2010 to 17.6% in 2011. Mintel expects growth rates for 2012 to be a little below those seen in 2011 but does not expect any major slowdown in growth.

In general over the last five years, the perfume and cosmetics category has underperformed the total global luxury goods market. But this is in large part because of the buoyancy of other categories, and the two most recent years have seen a strong improvement in demand for the perfume and cosmetics category. Annual market growth stood at 11.6% in 2011, down a little from the 12.9% seen in 2010. The slight slippage in growth rates in 2011 may be attributed to the strong comparatives of the prior year.

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SOURCE Mintel