What recession? Luxury brands reveal soaring profits

Consumers seem to take comfort in those LV and Hermes bags amid economic volatilities.

According to a release, Brand Finance's latest Global 500 study of the world's top brands suggests that, far from cutting their cloth, consumers are turning their backs on traditional household favourites and lower end products and embracing luxury lifestyle and indulgent brands despite the grim economic outlook.

The Brand Finance Global 500 report shows how the global downturn has spawned a new breed of recession proof and aspirational "Alphabrands" which we turn to for quality regardless of the economic conditions. Bucking the trend for consumers to look to lower end products during times of economic uncertainty, our results show that consumers are increasingly eager to indulge in high quality cutting edge design and couture. Some of the world's top fashion chains have experienced soaring profits with big brands such as Louis Vuitton ($US 4.9 billion), Hermes ($US 3.4 billion) and Polo Ralph Lauren ($US 3.3 billion) increasing their brand value.

2012 has also seen the re-entry of high end fashion houses such as Prada and Coach whilst Christian Dior and Burberry appear as new entrants in the Global 500 tables. Luxury jeweller's brand Tiffany & Co have also made the Global 500 for the first time ($US2.9 billion) whilst bespoke Swiss watch makers, Cartier, entered the ranking of the top brands with a value of ($US 3.1 billion).

As consumers continue to indulge themselves during the downturn, brands such as Rolls Royce have seen an increase of 17% in brand value to US$3.1 billion whilst both Daimler and BMW have benefitted from this renewed interest in luxury automobiles with brand increases of 20% and 5%.

Further evidence of consumers' lust for luxury has been seen by the drop in value of high street supermarkets such as Sainsbury's (now valued at $US 5.8 billion), ASDA ($US9.4 billion) and even Marks and Spencer's ($US4.5 billion) who have all suffered a difficult year.

The latest tech gadgetry appears also to be a must for today's consumers. Technology lifestyle brands also dominate the table, increasing their standings on last year's table by 79%. 49 technology companies appear in this year's Global 500 making it the most valuable sector by some margin. Lifestyle technology brand, Apple has leapfrogged Google to be named as the world's most valuable brand, having the highest ever valuation calculated by Brand Finance at an impressive $US70.6 billion.

David Haigh, CEO of Brand Finance, commenting on the tables stated: "The rise to prominence of luxury and lifestyle brands in this year's report is quite impressive. Whilst the world remains shrouded in economic misery, people are investing their hard earned cash in brands they feel they can rely on to produce quality, long lasting products. It is also an encouraging sign for the economy to see that the overall value of the Global 500 increase by 3.3% to $US3,415 billion from last year."