Louis Vuitton’s Most Valuable Luxury Brand

Forbes Magazine recently published a list of the 100 most valuable brands in the world.  Among them, it is possible to  find  many of those in the luxury industry. However, the first one,  Louis Vuitton is located just in 14th place. Forbes valued it around 30 billion dollars. Attributed to the brand sales of 10.1 billion and marketing expenditure of 4.6 billion USD.

Apple leads the Forbes list, although it is not a luxury brand proper, if it is premium, not surprisingly, their products cost almost twice that of similar devices. Apple’s strategy is very consistent with that used in the luxury sector, create loyalty (which sometimes reaches the «addiction») among its raving fans, mark  pricing policy regardless of its cost structure, completely controls distribution chain, creating a style products with own aura.

Advancing Forbes got to luxury brands: Gucci, Hermes, Prada, Cartier … and not only European in the top 10, Coach, from USA, valued at 8.6 billion. We still have questions  about  whether to include automotive brands like BMW, Mercedes Benz and of course a few years ago they would, however, have diversified their products to more affordable vehicles that cannot be considered as luxury.

If it falls in the top 10 of these marks appear us another Porsche, valued by Forbes at 7 billion USD, with which has happened as with Mercedes, used to have an undisputed status of luxury brand, but some of their vehicles have caused him to lose that status, far from luxury automotive brands such as Rolls Royce and Ferrari.

Difference between luxury and premium.
In the study of Forbes we have located two types of brands, which are premium (Apple, Audi, BMW) and luxury to these should be added the super-luxury, for example Rolls Royce, whose target audience is so small that has difficulty achieving a minimum return.

The premium paid for higher quality brands a higher price, without the additional mystique that has the luxury brands. Luxury products are unnecessarily expensive. Unnecessarily it means that the price is not related to performance. The price is related to its scarcity, the brand and the history behind it.

Companies with a high PER
Luxury companies revolve around marks the first order, has to keep its charm and , therefore they should constantly invest in marketing, this means that the stock market valuation of theses companies is rather high when compared with the benefits generated. They have a high PER (price / earnings ratio), which does not necessarily mean that they are overvalued. The stock price carries with it the estimation of brands and although Forbes estimates them, do not really know the value until the sale of the company occurs. The brand is without doubt the greatest asset that these companies enjoy.

The little glamour of financial data.
Luxury companies are not very inclined to openly show their financial data, it seems that this charm or magical aura of the brand at the coldness of numbers is lost. The analysis of the accounts might suggest to the consumer that luxury companies are «taking advantage» of the mystique of their brands to make huge profits. For this reason (among others) several of these companies simply unlisted in the Stock Exchanges (i.e Chanel), so they are not obliged to disclose its financial statements, and although it is possible to access them via a simple visit the commercial register, or by ordering on line financial reports to rating companies paying not a too high price, on the other hand not raised, we will never get a so big disclosure of data as those of listed companies.

Even if they are listed, the figures can come sufficiently aggregated, for example in the case of LVMH which includes many top brands and different product types, is not very difficult to get to the detail of what makes or worth every one of those brands. However Forbes, has succeeded on it ,and annually publishes this interesting ranking.