Industry Trend Analysis - China Luxury Focus: Wine And Champagne Winning Over Consumers - JAN 2018
BMI View: The Chinese consumer will continue to play an integral role in the global luxury market, as rapidly rising incomes in the world's most populous nation drives demand for high-end goods and services. Having seen a recovery in spending by the domestic Chinese luxury consumer in 2017, we believe 2018 will be a year of stabilisation, characterised by positive sustainable growt h , as efforts aimed at stimulating domest ic consumption support the Chinese luxury sector. We highlight wine and champagne as the luxury segment to watch in 2018. It remains underpenetrated compared to other secto rs, such as fashion and watches and jewellery, yet is in strong demand, as consumer preferences become more sophisticated and dining ou t proves increasingly popular.
We have seen a marked rebound in China's luxury market in 2017, in line with our view in the 2016 edition of our global luxury special report. This follows a challenging two-year period caused primarily by a state-led corruption crackdown aimed at curbing gift-giving and conspicuous consumption. However, luxury majors such as LVMH, Coach and Kering have all reported improved financial performances in their Chinese operations over the first half of 2017, as wealth creation effects from higher property prices and increasing credit uptake have boosted discretionary spending. If 2017 was characterised by recovery, we believe 2018 will be a year of stabilisation for China's luxury market.
Three key reasons for our broadly positive outlook for the luxury market in China in 2018:
Rapid Rise In High-Earning Households Expected China - Households Disposable Income +USD75,000 ('000) e/f = BMI estimate/forecast. Source: National sources, BMI
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