Titan: Extravagance is part of the market without a crisis – 06/24/2023 – Marcos de Vasconcellos

The tragic end of the submersible tour to see the wreckage of the Titanic, with the death of five people, also attracted spotlight for the price charged: US$ 250,000 per person. Practically R$ 1.2 million for the dive, which lasted about eight hours. Extravagant, but only part of a market for which there seems to be no crisis.

The most recent study by Credit Suisse pointed to a jump in the number of millionaires (with assets above US$ 1 million) around the world: from 57.5 million people, at the end of 2020, to 62.5 million, at the end of 2021 In Brazil, there should be 572,000 by 2026, predicts the bank.

The jump is explained in part by the Covid-19 crisis itself. While drastically reducing production around the world and putting the brakes on economies, the pandemic has increased inequality and, therefore, income concentration.

At the beginning of the month, I went to an event where manufacturers of jets, helicopters and luxury cars show their products and launches to consumers, at the São Paulo Catarina Executive International Airport, in São Roque (SP). The flow of people who seem genuinely interested in buying items like new McLarens is striking.

According to preliminary data from the organization, there were more than 5,200 visitors during the three days of the Catarina Aviation Show. The value of the deals actually closed during the event was not disclosed, but one of the eight aircraft exhibitors sold, right there, two helicopters, whose price is close to R$ 19 million each.

Partner at Andicrose, a workshop of luxury wooden bicycles that took advantage of the event to launch a new model of its bikes, Victor Mazzuco sums up well what happens: squeezes in the luxury sector are more related to the desire to spend than the possibility of do it. They are strategic stops, not an effective drop in purchasing power.

There was a reduction in consumption at the end of the year, following global trends of recession and the uncertainties of the election period. But the market reheated, with the simple maintenance of economic conditions for 2023.

Now, at the end of the semester, interest in handcrafted bicycles, whose price ranges from R$28,000 to R$60,000, has skyrocketed, says Mazzuco.

The case explains well the movement in the shares of companies linked to the luxury market on the Brazilian stock exchange.

Vivara, the jewelry store, and Grupo Soma, owner of clothing brands such as Animale and Farm, saw their shares (VIVA3 and SOMA3) soar by 35% and 45%, respectively, from April 20 to June 20. The Ibovespa rose 14% in the period.

The two are the only Brazilian companies in the ranking made by the Deloitte consultancy with the 100 largest luxury goods companies in the world, which added revenues of US$ 305 billion in 2021, surpassing the mark of 2019, the peak before the crisis.

In Brazil, the sector’s association, Abrael (Brazilian Association of Luxury Companies), points out that growth during the crisis was a reality and projects a 3% increase in the area’s entire revenue by 2025.

To seize the moment, however, it is necessary to be prepared to associate its brands with new consumer trends, says the Deloitte report.

According to the consultancy, luxury companies have begun to understand the relevance of resale as a strategic solution to limit the negative environmental impact of their products.

New tools for, for example, tracking the origin of luxury goods are starting to be demanded. It is up to the investor to see this before the luxury market consumers themselves.

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