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Interbrand launches premiere leading luxury brands study

Despite the economy, luxury leaders are taking a long-term view

New York, 12 December 2008 – In its premiere study of the world’s leading luxury brands, Interbrand examines how brands in the complex luxury sector are building brand value.

“Until recently it seemed that luxury brands remained stable through economic downturns. However, it is clear today, as we plunge forward into the challenges of global recession that no industry will remain insulated,” said Jez Frampton, Group Chief Executive of Interbrand.

“Luxury’s success at expanding its markets during the recent times of prosperity have left the sector more vulnerable today. And yet, there remains a tier of pure luxury brands that minimize risk and generate long-term value,” Frampton added.

Interbrand’s study identifies the top 15 global leading luxury brands by financial brand value, and taps into the management trends that define their achievements in standing the tests of time.

• With leading luxury brands, it is the brand that is master of the business. Unlike other sectors where business rules the brand and maximizing profits is a short-term sign of success, these brands play for the long-term. A Rolex (No.4, brand value $4.956M) is a family heirloom that increases in emotional, and financial, value as it passes from generation to generation.

• Leading luxury brands ask “why”, never “why not” when it comes to extending the brand. Managing brands requires discipline and precision. Manage the brand too conservatively, and it goes unnoticed. Spread the brand too thick, and you risk devaluing the brand. Tiffany & Co (No. 7, brand value $4.208M) takes an “affordable luxury” positioning to be more accessible to a broader audience.

• Icons of luxury stand alone. Leading luxury brands are not stretched into brand architectures with an array of sub-brands following in their footsteps. While sub-brands are a tempting offer for others in the broader category, Louis Vuitton (No.1, brand value $21.602M) does not compromise.

• Every facet of the supply chain makes a statement about the brand. Leading luxury brands are obsessed with the details and assume complete control, and occasional dictatorship, of insuring brand standards. Gucci (No.2, brand value $8.254M) takes great care to orchestrate a flawless experience from runway designs to opening the world’s largest – and possibly most luxurious – retail store in New York in 2008.

• Leading luxury brands understand the need for customer restraint rather than relentless acquisition. It is a paradoxical relationship but knowing when to say no – remaining the seducer not the seduced – requires a discipline that can often border on arrogance. Even the world’s wealthiest women wait on lists for the legendary Birkin bag from Hermès (No.5, brand value $4.575M)

• It is important to influence, without being influenced. Modern marketing techniques invite viral contributions that challenge the control luxury brands need to exert. Even customers can present risks to the brand if they misuse the brand or confer the wrong associations. Sometimes the riskiest customers are the brand’s most zealous endorsers.

• Leading luxury brands are borne of a philosophy, not a business plan. While many have sustained very successful and profitable businesses for centuries, more often then not the brand originated with the mission to bring excellence to the market. The creators of leading luxury brands were artisans, not MBAs.

While these leading brands offer important lessons to others and are likely to fare better than most in the uncertain economic times ahead, the markets are proving to be unpredictable.

“The social implications of this economic upheaval may forever alter the luxury market’s affluent consumer. The consistency with which leading luxury brands have managed themselves suggests that a ‘business as usual’ attitude in the uncertain times ahead will not be enough. As the excesses of earlier days disappear, constant determination, conviction and creativity will be a must,” said Jean-Baptiste Danet, Interbrand’s European CEO and a recognized leader in luxury branding.

Defining Luxury
As a prerequisite, a luxury brand sits within a tier of a consumer-facing category that demonstrates price insensitivity. For leading luxury brands, price not only has a low role in purchase decisions but demonstrates a combination of the following characteristics: an authenticity and sustained quality of excellence that makes the choice of brand exceptionally important for purchase; a level of desirability that effectively precludes substitutes or comparisons; and an iconic stature of a single-minded focus. All brands considered for the Leading Luxury Brands study must meet the criteria of being global, with at least 30 percent of sales volume being derived from markets beyond its home country and a presence in all the core markets of the Americas, Europe and Asia.

Leading Luxury Brands report available for download The Leading Luxury Brands 2008