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Deconstructing luxury

What drives high net worth individuals? How do they travel, eat, consume? And how does this change over time? To gather more insights, Julius Baer created the Lifestyle Index, which for the first time this year was broadened to include 28 cities around the globe.

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Interview with Rajesh Manwani, Head Markets & Advisory Solutions Asia

Could you explain the Julius Baer Lifestyle Index in a nutshell?
Rajesh Manwani:
The Julius Baer Lifestyle Index is based on a basket of 20 premium goods and services and aims to capture typical items that would make up a large part of spending for high net worth individuals globally. The index covers items across different categories, for example home, experiential, family, fashion, and wellness.

What motivated you to launch this index?
We have researched and published a similar index for Asian cities for the last eight years. We have found that many of our clients are interested in this topic as consumers, whereas others are interested as entrepreneurs or as investors.

The Wealth Report Asia has been immensely helpful for our clients, for ourselves and for the industry in better understanding affluent individuals, their consumption patterns and the price trends over time. It is now very timely that we extend the analysis to major cities globally.

How has the index evolved over the years?
We constantly review changing consumer attitudes in the composition of our basket. For example, in view of the increasing demand for differentiated experiences, we have included hotel suites, fine wines, whiskey, and high-end dining. In light of the trend towards conscious and sustainable luxury, we have included environmentally friendly hybrid premium cars.

What are the main findings of the 2020 Global Wealth and Lifestyle Report?
One clear trend is that younger consumers – whether Millennials or Gen Z – are drawn to companies that embrace sustainable values in a very authentic manner. And we can visibly see that. Another trend – largely driven by older consumers – is to focus on wellness. This market is expanding rapidly on the back of solid demand from those in their forties or even older, who have greater disposable income and prioritise experiences that foster emotional and physical well-being.

Based on the Lifestyle Index, you created a city ranking of 28 cities across the globe. What were the most surprising findings?
Surprisingly, despite the continent’s higher purchasing power, it is considerably cheaper to purchase the lifestyle index items in Europe  than in Asia. This is largely due to higher taxes in Asia and more affordable prime real estate in some European cities such as Frankfurt and Barcelona.

How is Julius Baer’s general outlook for the luxury market?
The global demand for luxury may be influenced by the slower economic momentum we have seen recently. But over time, we expect it to remain on a steady growth trajectory. This is also evident from the outperformance of luxury stocks against mainstream indices.  

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The Julius Baer Global Wealth and Lifestyle Report examines consumer behaviour and global price trends of premium goods and services in order to gain a better understanding of the world of luxury.

To download the report, please enter your e-mail address below and you will receive a download link via e-mail.