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What constitutes luxury?

Jun 03, 2014
Millennial shoppers are more likely to place greater weight on a brand's history.

Millennial shoppers are more likely to place greater weight on a brand's history.

A special wine was in order. Milton Wordley, the publisher and photographer of A Year in the Life of Grange, had just returned from collecting the gong for best wine photography book in the world at the international book fair in Beijing and couldn’t wait to hit Chinatown for a sesh.

Regardless of how perfectly appropriate it would have been, Grange is far beyond the pockets of writers and photographers.  So I wandered around the shop for 15 minutes, pondering. There was a Chilean Carmenere 2012 from Casillero del Diablo for $15. I know this wine well: it gives me such pleasure I can briefly overcome my fear of being spotted in a Coles Vintage Cellars store, that mob being the exclusive stockists. Which left me with the job of selecting something that could breathe while we worked on the Carmenere.

There was one lonely bottle of Massolino Serralunga d’Alba Barolo 2008 (a goodish Nebbiolo) for a touch over $100. Knowing I could get if for half that in the US, I nevertheless gritted my teeth and took my bottles to the counter. The gentleman behind the jump immediately decided this hayseed before him in the Drizabone had stupidly bought a bottle that was way outside his range and understanding.

He dealt easily with the Carmenere, but when he took that Barolo in hand he made a display of checking the barcode repeatedly as if he disbelieved the price, using that opportunity to say very loudly, “Well that one’s a hundred and … [whatever it was]”, as if such thoughtful warning would drive me away, or back to the bargain bucket, or at least alleviate the embarrassment he could see coming when the money matter actually dawned on this hillbilly in the hat.

Years of experience has taught me that the best way through these awkward little crises is to keep up the dumb act, pay the money and flee.  Which is not what happened earlier this year when the wife of a successful millennial reported him walking out of the local Bentley store disgusted at the salesman.

I dunno the detail but you can imagine. “Does this kid seriously think I believe he’s gonna fork out half-a-million for the new Continental GT Speed?”

“Superior customer service is the most important aspect of my experience,” the wife told New York researchers. “My husband walked away from a Bentley dealership because the salesperson did not treat him with respect.”

This was reported in the New York based Luxury Institute’s Second Quarter 2014 Wealth Report. A fascinating research house which rarely attends to matters as mere as alcohol, or other extravagant  intoxicants, for that matter – perhaps the implications for that sector are just far too obvious – this is a good guide to market trends among the very rich, many of whom happen to nurse extreme thirsts.

It always seems at least six months ahead of whatever research becomes available in the Australian wine business, if indeed it ever does.

While the future of Australian wine undeniably lies in our capacity to grow and make better-quality wines of genuine provenance with environmental responsibility, and to present them packaged, priced and delivered accordingly, we see this week kicking off with former big liquor lobbyist Senator Simon Birmingham making announcements about how this inexplicable government has decided to make it easier for big irrigators up the river to get water to make more low-profit plonk, regardless of the environmental science and the math of the community paying for the public health damage, accident and domestic assault, et al, et cetera.

Contrary to popular wine biz grizzles about China backing off in the luxury sector, the Wealth Report suggests:

“Retailers in the luxury space are benefitting from the improving economic outlook around the world, and from climbing equity and real estate prices in China, the United States and Europe. Although volatility has returned to the stock market, the overall trend remains higher, which is producing a significant wealth effect in combination with many residential real estate markets showing double-digit percentage gains in year-over-year median sales prices. In China, fears of a hard landing have subsided as GDP growth continues north of 7%, and confidence is also on the rise across Europe.”

Which should sound good to producers of drinks like Grange or great Barolo. But it shouldn’t stop there. New mobs, like the Millennials, are “constantly redefining what constitutes luxury”, so such “brands will need to stay in touch with the evolution in tastes and preferences”.

Put simply, inanimate objects are not in themselves cool.  They have cool only when they’re being used by people who are regarded as cool by their aspirant peers and rivals. The minute the cool move on to whatever’s next, the former item reverts from cool to inanimate.

The Report cites a posh handbag example. Despite a much older brand, Coach, having long held its ground as an established and dominant label worldwide, Michael Kors is determinedly cutting the old Coach’s lunch, expecting to grow revenues 47 per cent to $3.2 billion this year while Coach takes a 3.7 per cent dive to $4.9 billion.

The Luxury Institute surveyed US customers over 21 years of age earning more than $150,000. The median annual income of consumers surveyed was $224,000; their median net worth was $1.3 million. The three appellations break down so: Baby Boomers (born before 1965), Gen-Xers (1965-1980) and Millennials (born since 1980).

In a group one would suspect was riddled with gauche nouveau riche, the conservatism struck me. Across all groups, superior quality was the major determining factor in the decision to purchase (86 per cent), followed by craftsmanship (76 per cent), then design and superior customer service both coming in at 62 per cent.

Discoveries about the spending habits of the millennials are fascinating. Millennials – which include, I suppose, the Hipsters – seem the most uncertain, but are happy to seek advice, with 68 per cent of them trusting the advice of knowing others, usually friends, before they buy. This number dropped to 64 per cent in Gen X, and all the way down to 58 per cent in my lot, the Baby Boomers.

“Millennials are significantly more inclined than their older cohorts,” the Report says, “to place greater weight on a brand’s history, one-of-a-kind products and investment value when it comes to evaluating luxury brands.”

It’s the opposite, see, to what you think when you’re old. Given this state’s bounty of pre-phylloxera vineyards and the skills of some of our gastronomically intelligent winemakers, I would expect this emergent market is something I would be engaging with great determination and care. There’s very obviously money there.

Panicky, embattled wine wholesalers and retailers freaking about everybody suddenly buying their booze on the net should stop for a breath, too.

It’s actually about 50-50 in these higher echelons, across all groups. Like net vs walk-in store.

“As compared to Baby Boomers, younger affluent consumers are savvier at researching in-store then purchasing online,” the report says. “However, the practice of researching online and then completing the purchase in-store is still popular across all generations.”

So there you go, neighbours and countrymen. Better product. Better provenance. Better packaging. Better service.

Remember your advantage: nobody can yet deliver flavour and smell with zeroes and ones. But once you’re got your new customer across the table with a glass and your bottle in their hand, never ever judge them on their appearance.

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