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Club Rich is 1.8 million and growing

According to a study by management consultancy KSA Technopak, more than 1.8 million Indian households will have an annual income above Rs45 lakh by 2007-end.

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MUMBAI: For K Sanjay Prabhu, Sunday usually means spending quality time with his high-end customised home theatre system and two kids. “I’ve got the best in the market. It cost me more than Rs200,000!” says 44-year-old movie and music buff Prabhu, director and CEO of the Bangalore-based Radio Indigo.

If one were to believe Arvind Singhal, chairman of the management consultancy KSA Technopak, by the end of 2007, India will have more than 1.8 million Sanjay Prabhus, i.e., households with annual incomes above Rs45 lakh. That tots up to 6 million Indians.

Singhal and his team have met over 4,000 affluent consumers spread over 12 cities across the country to map the emerging super-rich category. The KSA Technopak study finds that the chief earners in such households are 35 years old or more and one-third of them have men and women with professional qualifications. “Almost 70 per cent of such households are engaged in business. Significantly, 20 per cent comprise executives,” says Singhal. “The traditional rich comprise less than 1 per cent.”  

Each household in this new class will spend about Rs 400,000 lakh a year on luxury and premium goods and services. That works out to a market potential of Rs72,000 crore.

It’s a story of first-time wealth creators. “The 45-lakh plus households are growing at an incredible rate of 12 per cent. That works out to at least 216,000 new households every year. Indians are getting rich,” says Singhal.

And the world’s taking notice

The India growth story is not just confined to the ‘super-rich’. The ‘ultra-rich’ too is a creation of the booming economy. The World Wealth Report published by the investment bank Merrill Lynch and the consultancy firm Capgemini last year says the number of High Net Worth Individuals (HNWI) - liquid assets of more than US$1million, excluding primary residence and consumables - increased by 19 per cent in India.

While, at one level, the rich are being hair split into ‘rich’, ‘super-rich’ and ‘ultra-rich’, the average Indian consumer is also feeling the rub-on effect. A C Nielsen’s Global Consumer Confidence Report, 2006, finds the Indian consumer upbeat, with over 85 per cent saying their personal finances will improve in 2007 and over 60 per cent saying they will make big ticket purchases this year.

“Lifestyles are becoming global. I have clients who want to set up niche luxury goods and premium services stores in India. We are on the brink of a pretty big revolution,” says Sarang Panchal, executive director (Customised Research Services), Asia Pacific, A C Nielsen. “The aspiration levels of the Indian consumer are becoming international.”

And if the world’s taking notice, then the advertisers are paying close attention to this phenomenon. Quite a few are rubbing their hands in glee. “Of course, it is a huge opportunity for us,” adman Prahlad Kakkar told DNA. “The primary occupation of all Indians has always been shopping. Earlier, every distant cousin who went abroad returned loaded with goodies. Now, the opportunity is available in India.”

The new Indian, loaded with cash, is not price conscious. “He is value conscious and wants luxury and premium products,” says Singhal. Kakkar agrees. “Today, the value lies in a brand. A T-Shirt is no longer a T-Shirt. It reflects the brand with which you want to be associated. A product has acquired aspirational overtones, making it what you want to be,” he says.

Media planner Sandeep Nagpal points out an interesting conundrum that the advertising industry faces today. “Target audience categorisation in terms of SEC A/B/C is no longer relevant. What do I call the new class of super-rich, who are not conventionally SEC A? SEC A+?” asks Nagpal, director, Strategem. “The super-rich are also redefining the marketing paradigm. Unlike earlier, intangible values are becoming more important than tangible values.”

Where is the new money going?

Luxury and premium are the buzzwords when it comes to spending that wad of cash. “Premium housing, premium education and premium vacation are the top three picks,” says Singhal. “For instance, a premium vacation will mean a private cruise along the Amazon river, and not a trip to Bangkok and Pattaya.”

As for personal accessories, jewellery (27%), clothing (16%), digital accessories (13%), timewear (8%) and cosmetics and skincare (8%) occupied the top slots. But, significantly, there was a difference between ‘super-rich’ men and women.

“The top two picks of men were premium watches and premium eyewear, while the top two for women were premium jewellery and cars,” says Singhal. “In fact, the eye-opening fact was women preferring cars. And these were not high-end ones, which could only mean that women perceived mobility as freedom.”

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