Between 3 and 6% of GDP in Francea million jobs and the 40% of the capitalization of the companies of the CAC-40 index of the Paris Stock Exchange. Because the luxury sector has established itself as an engine of the French economy after emerging unscathed from the successive world crises?
The confinements due to the coronavirus, the Russian invasion of Ukraine in February 2022 and its effects on inflation or supply chain problems. Many large French companies have suffered in these troubled times, although luxury companies are one of the exceptions.
In the main index of the Parisian Stock Exchange, the CAC-40, the four largest companies in the sector (Louis Vuitton Moët Hennessy -LVMH-, L’Óreal, Kering and Hermès) already represent the 40% of capitalization, compared to 28% before the COVID pandemic.
LVMHled by what is considered the richest man in the world, bernard arnault, is the company with the highest value on the stock market in Europe (about 440,000 million euros, or 488,000 million dollars) and in 2022 it obtained record results of 14,000 million euros (15,559 million dollars). In a deficit trade balance for France, luxury contributes 50,000 million euros (55,568 million dollars) in exports per year.
Where does that resilience come from? “Humankind adores beauty and, once it manages to satisfy its essential needs, the first thing it does is to see how it can be included in its life”explain to EFE Benedicte Epinaythe director of the Colbert Committee, the French association that brings together 93 companies in the luxury sector.
Those coveted and expensive products are not just gold necklaces or Christian Louboutin shoes. “A lipstick can be considered a luxury product. We can start like this and later buy a couple of diamonds,” says Epinay.
The post-covid reopening of the Chinese economy and other large countries in the Asian market, such as Japan, have contributed to the excellent results in 2022 and the good prospects for this year, he stresses.
The latest market studies predict that The Chinese will unseat the Americans by 2025. as main consumers of luxury products and represent 40% of the world total, compared to 19% in 2012.
An illustration of the impact and strength of French luxury is the viral advertisement for Louis Vuitton, in which they appear Leo Messi and Cristiano Ronaldo playing a game of chess on a suitcase from this iconic brand. This image, released in November 2022, on the eve of the Qatar World Cup, is considered the photo that has received the most “likes” in Instagram history.
Social criticism of luxury
Despite the seemingly cloudless horizon, French luxury has some dark clouds in the offing.
Among them, the lack of qualified labor, the need to adapt to the new European environmental regulations and the social criticismincreasingly accentuated, towards the stratospheric profits of the big French luxury firms in a context of increasing social inequalities.
“You have to stop focusing on those who consume luxury. You have to put it in those who make it. Now we open many centers, we are the banner of ‘made in France’. In this way we will rehabilitate the image of the sector before a small part of the French”, Epinay concludes, alluding to the invasions and attacks on luxury stores during the current pension crisis and that of the yellow vests (2018-2019).
The relocation of production to countries where labor conditions do not offer all the guarantees is another of the frequent criticisms to which the sector responds.
For the expert in luxury companies, Anne-Flore Maman Larraufiethat question is less and less difficult, since a process of “company relocation” is taking place.
“From Asia, for example, certain parts and ingredients are still imported. French companies seek to do everything possible from here, also as a way to control the production chain,” he said. maman larraufie.
The professor of the Higher School of Economic and Commercial Sciences, without giving the number of companies that still use relocation to a large extent, gave as a good example Hermeswhich has bought a crocodile farm in Australia to be able to directly control the origin of the skin with which to manufacture.
According to Maman Larraufie, French luxury has no ceiling: “There are many markets to conquer, Latin America and, above all, Africawith billions of new potential consumers”.
(With information from EFE)
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