The report from Deutsche Bank’s Devin Mullenix and Stephanie Talbot also analyzed the revenue returns generated by luxury goods on global luxury sales — estimates of luxury sales growth by luxury brands and what their projected revenue should be if their leading global markets are realistic.
The results aren’t pretty.
Geographically, China, India and Russia “account for just a fraction of global luxury revenues, yet represent over half of the world’s total consumer spending on luxury,” say the authors.
Here’s how it breaks down:
In 2008, the countries with the world’s highest consumption of luxury goods (31%, 22% and 7% of their respective total world population) were China, India and Russia.
In 2017, the countries with the world’s highest consumption of luxury goods (28%, 12% and 3% of their respective total world population) were China, India and Russia.
There were also marked declines in terms of the amount of direct cash paid in taxes on luxury. “Although the Chinese proportion of luxury consumption kept its steady pace between 2007 and 2017, the Chinese contribution to global luxury sales reduced dramatically — by 36% — in the same period,” the authors say.
Housing also exposed the highest users of luxury goods to higher revenue taxes and which have since been the main source of the decline in top- and middle-income Chinese GDP growth, says the authors. In 2016, luxury goods consumption accounted for more than a third of the country’s $1.5 trillion global GDP — a high number even for China.
Contrast that with wealthy European countries that largely escaped the 2008 crash, a story told frequently in the media in recent years.