Luxury News Q1 2009

New "luxury" vodka launches, Burberry and Saks are both losing money faster that the governments can print it and MGM Mirage takes a gamble on Asia and the Middle East

What the world needs most in these troubled times is – a new "luxury" vodka apparently. This is an excerpt from a press release by Diamond Beverages – Aficionados of single-malt Scotch have long enjoyed the "luxury" option, as, more recently, have fans of Tequila, rum, and other distilled spirits. But what of the most popular distilled spirit in the United States – vodka? Illinois-based Diamond Beverages LLC has introduced Diamond Standard Vodka, a brand that single-handedly establishes a new "luxury" category for vodka. Utilizing the world's most expensive filtration process (diamond filtration), and retailing for $79 per 750ml bottle, Diamond Standard Vodka was introduced this month in Florida, with states including Illinois, Nevada and California set for early this summer and a national roll-out underway over the next seven months. Diamond Standard Vodka moves beyond the cluttered "Ultra-Premium," category, where vodkas priced in the $30-$40 range have long lacked clear differentiation.

I am a little confused though. I was under the impression that "Ultra-Premium," was one step up from "luxury," a step down from "mega-premium," and not quite as good as "supra-luxury."  Maybe I need to rethink the various differentiations……..

Meanwhile over in the recently-revived corpse of the stock market, Burberry, the British luxury goods maker made a £5.1 million ($7.9 million) loss for the year after it heavily discounted products to maintain sales, wrote down the value of Spanish stores and bore the cost of moving its London and New York headquarters. Burberry has been firing staff left and right in anticipation of  dropping sales and this is actually not such a bad result. Look for the serious losses 2009-10.

At the same time Saks managed to keep their first quarter losses down to just $5.1 million with sinmilar cost cutting exersises, although according to the cheif exec, Steve Sadove, "The consumer is still buying some full-price" products. While feeling a lot less wealthy than in the past, the luxury customer still likes to shop. The consumer is looking for value. There is a consumer that has been holding off in terms of waiting for some form of a discount." Which – if you think about it – doesn't mean anything. Once again the losses were less than expected – possibly down to the new accounting rules the world has adopted – value it at whatever you feel like.

Over in casino land, MGM Mirage is moving out of the gambling business and into the hotel business. An executive says the company has signed eight hotel-management deals with developers and is in discussions with 10 more about opening hotels under the banners of its iconic Vegas properties, including the Bellagio and the MGM Grand, across Asia and the Middle East. In most cases, the properties will be marketed as luxury hotels and won't include casinos. Seems like out of the frying pan and into the fire – the luxury hotel business is in almost as much trouble as the casino business.