Luxury Spending Continues to Roll Despite Rising Prices
Even as prices keep climbing, the wealthy keep splashing out on the finest handbags, signature perfumes and bubbly drinks. Recent updates from Hermès (the Birkin bag icon), Gucci‑owned Kering, L’Oréal, and Pernod Ricard show the trend is still on.
The Big Players
- Hermès and Pernod Ricard confirmed they’ll keep hiking prices due to cost increases.
- After a strong recovery in mainland China post‑COVID, both brands saw a lift in sales—though a few restrictions are creeping back.
- Kering and L’Oréal struggled a bit; sales at Gucci fell in the July‑September quarter.
Why Prices Keep Going Up
Higher production costs and a thriving dollar have pushed companies up the price ladder. Plus, wealthy consumers globally are still digging into pandemic‑era savings to treat themselves to designer labels and champagne.
Executives Stay Blithe
Jean‑Marc Duplaix, finance chief at Kering, shrugged off concerns. “We’ve weathered uncertainty before, and our long‑term view is solid,” he said. He added that while high‑spend U.S. markets are booming, cheaper aspirational items aren’t performing as well.
Analysts’ Take on the Future
Many expect the sales growth to ease in the next quarter or start slowing next year. The big names—Chanel, Hermès, Louis Vuitton, Dior—plus smaller hitters like Moncler will likely snatch more market share.
Sophie Lund‑Yates, lead equity analyst at Hargreaves Lansdown, praised the high‑end segment:
“The upper‑tier market is far more attractive than other consumer discretionary companies in today’s climate. High‑net‑worth consumers are far less likely to be hit by tough economic conditions.”
Jefferies projects 13 % sales growth for the luxury industry this year, dropping to 7 % next year.
Price rises
Pernod Ricard, Hermes & Co: The Big Price Push of 2023
What’s the deal?
- Pernod Ricard – turned up the thermostat on its spirits by about seven percent globally over the last quarter. The company’s crystal‑clear bet? Sales growth will keep rolling in for the rest of their fiscal year.
- Hermes – after making a five to ten percent price jump next year, thanks to a pandemic‑era pricing strategy, its iconic handbags (>= US$10k) are already on a waiting list frenzy.
- Both Hermes and Kering faced inflation pressure on suppliers: raw materials, energy, you name it.
Lower‑priced Goods Are Not Out of the Game
Not all brands are luxury‑only. Nestlé and Procter & Gamble, the giants that keep our breakfast coffee and razors affordable, have also been sliding up prices.
- Nescafé coffee: still demands a few extra bucks from stuck in the coffee rush.
- Gillette razors: you’ll see a noticeable hit on the price tag, even with inflation at its highest.
Why the Price Hikes? The “Inflation” Story
Economics 101: when the cost of goods rises and supplier costs jump, brands react. But they’re not just storing the squeeze for their own pockets. They’re passing on the burden to the wallet of every customer, whether they’re buying high‑end vegan lattes or a standard cruiser code‑version.
Game Plan for 2023
Both premium and mass‑market brands are playing the same game:
- Keep the product quality high.
- Use price adjustments to cover rising costs, yet remain competitive.
- Stay flexible: if the inflation curves shift, so will their prices.
Bottom line: Whether you’re sipping a stylish cognac or buying the latest dual‑battery smartphone, the bag of pennies is going to feel a little heavier in 2023. But rest assured—human innovation is still sprinting ahead, and brands are doing their best to keep your experience delightfully upgraded.
