Whether you’re a designer, fashion consumer or luxury enthusiast, you may have thought ‘does Kenya really have a luxury market?’. It’s one thing to read about existing luxury brands and markets that are established on other continents. It’s another to prove that luxury can essentially thrive on our little corner of the world? Not just in the aspect of having access to international luxury brands, but also being able to start Kenyan businesses that compete with luxury internationally while having clientele locally. If the investment of foreign brands in the country is anything to go by, it just could.Don’t be fooled by the online mourning that January was a never-ending year. There’s hard statistics that prove that Kenyans are shopping for the most expensive luxury goods on offer. The acceptance of luxury items ranging from clothing and cars to real-estate and accessories can be attributed to certain factors. Namely, ‘the rise of the middle class, existence of a sizeable number of expatriates and the rise of dollar millionaires- who have a taste for luxury brands’. In fact, The 2017 Afrasia Bank New World Wealth survey placed Kenya as the second largest luxury market by revenue in the continent.
Still not convinced, as a budding luxury brand, that you’ll have a local customer base? Take heart in the knowledge that Kenya has had millionaires on her soil for some time now. There were 8,500-dollar millionaires in 2015, and by 2016 that number had grown to 9,400-dollar millionaires and 370 multi-millionaires; according to the Africa Wealth Report 2017. That’s a growth of 8% in a year. Such figures rank the country fourth on the continent after South Africa, Egypt and Nigeria. Note: multimillionaire is defined in in their research as an individual worth more than one million US dollars; sans primary residences. And they love to spend. In 2016, the report estimates that ‘the African luxury sector generated approximately $5.9 billion in revenue in 2016, with the Kenyan luxury market having generated $500 million’. That’s thanks to components such as prime real estate, liquor, travel, second homes, luxury cars, yachts and personal goods such as clothing, watches, jewellery and accessories. In private jets alone, Kenya ranks fourth as a top private jet market with 30 multi-millionaires owning private jets and 110 using them.
Such growth has attracted world famous luxury brands to set up shop locally. From car brands such as Porsche, Jaguar and Bentley to world class hotels and lodges such as Finch Hattons in Tsavo West National Park and Mahali Mzuri owned by Virgin Atlantic billionaire Richard Branson. It’s this same desire for quality products and the high-spending power of the growing middle class that also attracted luxury product retailers such as Austrian jewellery brand Swarovski in the last quarter of 2017.
Alexandre Helaine, Moët marketing manager for East Africa, elaborated in a 2017 interview with The Star Digital, “Kenya is the most open business for luxury brands as you have the middle class growing a lot. It is building and endorsing a lot of new cultures, so it’s a very nice platform for luxury brands to grow.” Sentiments echoed by Euromonitor’s report on ‘Retailing in Kenya’ that attributes the growth in 2017 to ‘higher disposable incomes among the Kenyan middle class, continued modern retailing expansion by manufacturers and increased investment by leading foreign retailer players’.
But is this trend a long-term affair? Over the last 10 years, Kenya’s High-net-worth individuals have grown by 93% and are projected to grow by 80% by 2026. According to South African-based wealth firm, New World Wealth, Nairobi alone had 6,800 millionaires and 280 multi-millionaires in 2016. And it looks like they aren’t looking to relocate permanently. Previously, wealthy Kenyans would have chosen to invest in luxury properties in London, South Africa or New York. However, there’s an evident shift in perspective with more Kenyans choosing to invest locally. Not to mention, Knight Frank Inside View Kenya 2018 report listed Kenya among the top five most popular second home locations for Africa’s wealthiest. Additionally, 4% of the global HNW (high net worth) population owns homes in Kenya as well.
Let’s not forget the flashy millennials that are attracted to top luxury brands. The aspiring middle class are consuming luxury goods for the recognition and status. As sociologist and trends observer, Loice Okello, told African Business Magazine, “There is a generation of Kenyans climbing up the social ladder with money to burn. Unlike their predecessors, they are not ashamed to flaunt it.” They’re not only fuelling demand for high-end popular brands such as Gucci, Prada and Louis Vuitton, but also the super-luxury brands that make the above look like chump-change. And this rapidly growing middle class may just be here to stay.
According to Bernard Peillon, Chairman and CEO of Hennessy, Kenya possesses the right conditions to facilitate the expansion of the middle class. Speaking to Standard Media, he noted that ‘The country’s geo-political position in East and Central Africa makes it ideal and strategic… We know if we are successful in Kenya, then it will be relatively easier for us to expand into the region. Kenya also has an expanding economy and a population of more than 45 million and literacy levels are good.’ For the world’s largest maker of cognac – who is also a unit of Paris-based LVMH, to start distributing its products in Kenya, they’ve certainly seen the possibility of the luxury market achieving critical mass.
It’s undeniable that there is a strong demand for luxury in Kenya. As University of Nairobi Economics lecturer, Michael Chege, told the Business Daily Africa, “Conspicuous consumption marked by heavy spending on high-end luxury goods (top of the range cars and whiskeys) has taken root to become the new normal in Kenya.” He further elaborates that this need to ‘flaunt’ one’s wealth is a trademark of any rapidly-growing economy ripe with inequalities that are juxtaposed with the newly-rich. So, while Kenya has become a mecca for international luxury brands, the question becomes whether local entrepreneurs or brands can or are willing to tap into this luxury market. Particularly at the rules and levels luxury dictates?