FOR the next five years, South Africa’s luxury goods market is expected to grow 20%-30%, global consultancy Bain & Company said this week, an indication of steady demand for upmarket trappings in Africa’s biggest economy.

The prediction supports recent comments from Jeanine van Zyl, head of retail equity analysis at Old Mutual Equities, who said people with jobs had managed to climb the wealth ladder thanks to several major trends, such as above-inflation wage increases and more higher-income jobs being created.

According to Paris-based Bain’s Luxury Goods Worldwide Market Study, total luxury goods revenue in South Africa is expected to reach €8m this year.

Interestingly, the Bain report, which was prepared in conjunction with Italian luxury goods association Altagamma, found that tourists now account for 40% of global luxury spending.

Earlier this year, Euromonitor International said a recent spate of oil and gas discoveries in Africa — and the high probability of more to come — could provide a get-rich-quick spawning ground for a new generation of high net-worth individuals.

Apart from South Africa’s affluent African professionals, rising fortunes in other African countries such as Nigeria, Angola and Ghana have also contributed to the sales uptick of luxury goods in South Africa.

Bain’s findings indicate the worldwide luxury goods market revenue will grow by 7% in the final three months of this year, culminating in full-year growth in 2012 of 10%, and pushing total luxury goods revenue to about €212bn.

But a recent mixed bag of sales updates from upmarket players has hinted at the beginning of the end of the luxury boom, as Europe’s debt crisis and a slowdown in China finally catch up with the well-heeled.

This week, LVMH, the group behind brands such as Louis Vuitton, Veuve Clicquot and Fendi, said organic sales growth in the third quarter had slipped to 6% — this compared with 15% growth during the same period last year.

According to Claudia D’Arpizio, a Bain partner in Milan and lead author of the study, concerns about market weakness are "somewhat overblown".

Richemont, best known for its Cartier and Montblanc brands, in September said sales increased by 23% at actual exchange rates‚ and 13% at constant exchange rates, boosted by tourists for the five-month period ended August 31. The weakening of the euro against the dollar‚ in particular‚ had a positive effect on the group’s sales.

"Fundamentals for growth remain strong, but it’s going to be a bumpy ride. The strategies that brands relied on to win in the past simply aren’t going to connect with the segments that will matter most in the second half of the decade," Ms D’Arpizio said.

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