The Rise of the Mass Affluent
In the 1980s, Stella Artois beer sold itself with “Reassuringly Expensive” as its tagline, and this is the essence of brands such as Apple, who deliver a high-quality product, cutting-edge design and technology, and on-trend marketing that build a cult following. Sought-after, luxury products are democratised through affordability, especially when mobile network operators provide handsets costed over two years at 0% interest. As Steve Jobs put it: “You know, everybody has a cell phone, but I don’t know one person who likes their cell phone. I want to make a phone that people love.”
While Apple is leading the charge, others are riding swiftly on its coat tails. Tesla – once regarded as the brand of choice for eco-sensitive Hollywood royalty – has released its first ‘economy’ car, the Model 3, which comes in at around £35,000 (the same price as a new mid-range BMW). Tesla’s brand credentials have seen it overtake the market cap of General Motors in the US, despite having a fraction of the sales. The vision of clean, self-driving vehicles is the future – and this is what Tesla is delivering right now.
This is something global early adopters are buying into. Amazon’s acquisition of Wholefoods last year, widely regarded as both the most expensive and healthiest of the US supermarket businesses, is signalling a leap forward in the quality of produce Amazon intends to retail. If they are going to be taken seriously as an online grocer they need to build instant brand trust and recognition, and with Wholefoods, nobody is going to doubt the quality and provenance of their products. Coupled with same day deliveries and an unmatched logistics chain, this is likely to push Amazon towards the mass affluent, aspirational market.
The mass affluent market is now the key demographic to focus on for ambitious brands. The super high-end luxury market will always have its ultra-high net worth supporters and their aspiring acolytes, but more and more of the market is moving away from opulent status symbols of the past, and towards affordable, cutting-edge design and technology. This is where we believe some of the best long-term strategic investment opportunities could lie.
This article is designed to throw an everyday lens on some of the issues being discussed and debated by investors across the world; it is not research, so please do not interpret it as a recommendation for your personal investments. If something has piqued your interest and you would like to find out more or discuss what investments might be suitable for you, please contact one of our Investment Managers on 020 7337 0777.