The Hindu Business Line : Youth and beyond

The past few years have seen a number of luxury brands make a beeline for the Indian market. The attraction? Rising income levels as well as the rapid growth in the number of new millionaires year-on-year. Combine this with the Indian consumer's inherent obsession with luxury brands, and you have a luxury goods market which is poised for exponential growth.

In an interview with BrandLine, Jean-Christophe Babin, President and Chief Executive Officer of Swiss luxury watch brand Tag Heuer, speaks about the brand's experience in the Indian market so far. Interestingly, within five years of launch, Tag Heuer already sells as many watches in India every year as it does in France. Babin speaks about the strategies that helped the brand rapidly gain market share and about the way forward for the luxury brand in India.

Tag Heuer has been present in India for about five years now. Has the growth experience been as per the company's expectations?

India is a very important market for us. We are already ranked as the fourth largest luxury watch brand in the country. And within five years. I would say it is an accomplishment for the team as we started from scratch at a time when many of our competitors had been present in the market for much longer.

In the current year, we are growing at 50 per cent while we know that competition is growing at eight per cent. This means that there is a strong momentum in Tag Heuer. The brand is pretty hot! The positioning of sports and glamour apparently is meeting broad acceptance within our target group in India.

And the target group consists primarily of the youth segment?

Interestingly, I have found here that though there are a lot of young customers, increasingly there is demand from men over 40, especially for lines like the Carrera, which is our best seller in India. This could also be because our brand ambassador Shah Rukh Khan is seen wearing the Carrera, and Shah Rukh is himself over 40. So he is not exactly young any longer. So the combination of a mechanical sophisticated model like a Carrera, blending some classicism with sporty spirit, and ambassador Shah Rukh Khan who himself is in his forties, makes it very relevant for people in their early forties.

Initially, we sold more from our Formula One series, which had more younger customers as the price is also much cheaper at Rs 30,000. The Carrera collection is priced at about Rs 1.2 lakh. So there were young buyers initially but now it is very much balanced. We have more and more ladies and more 40-plus men buying Tag Heuer.

Internationally, more women are buying watches. What is the distribution like for Tag Heuer? Will we see the brand reaching out to more women consumers?

If you compare to the worldwide average, which is 30 per cent ladies and 70 per cent men, today in India it is still about 20 per cent ladies and the balance men. We decided that to establish the brand we have to make choices and have a lot of focus, and so decided to target men. And we advertised our collection using brand ambassadors Shah Rukh Khan, Tiger Woods and Brad Pitt.

Now we are big enough to get into Stage Two, which is to feature more of our ladies' collection and start using women brand ambassadors. In India, we have been using Sushmita Sen for events, but not our international brand ambassadors yet, like Maria Sharapova or Uma Thurman. Now the second stage for brand building would be to disclose the feminine side of the brand. You will see more of those brand ambassadors in our advertising.

What are your plans for retail expansion? With foreign investment now allowed in single brand retailing, are you likely to invest in this area or continue to follow the franchise model?

We currently have eight outlets and 45 points of sales. By 2010, we will have 40-50 standalone boutiques and about 100 points of sale. It is very important to combine both the strategies. However, we will continue to follow the franchise model.

Our core expertise is really in designing, manufacturing and marketing luxury watches and not in retailing luxury watches. We do have a lot of strict guidelines for our licensees and there is a very strong brand identity imposed. We prefer to put our money in advertising and product development.

How do you see the luxury goods market developing in emerging countries, especially India?

More new rich people are coming from emerging markets than the developed markets. In fact, 90 per cent of the new millionaires are coming from Russia, India and China every year and only ten per cent from the rest of the world. Initially, there were fewer from India but now India is one of the key countries and will drive demand for luxury goods.

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