It’s a luxe field at Euro 2008

With matches showing in India and China, companies set sights there and beyond

ZURICH: Hosted by Switzerland and Austria, the Euro 2008 soccer tournament lacks the bling of previous events, as Victoria Beckham and her posse of footballers’ wives and girlfriends aren’t expected. But even if Beckham and the WAGs stay at home with an unsuccessful England side, the makers of luxury goods still see the three-week tournament as a boon for glamour.

Beyond the marketing power of top players’ zealously groomed companions, luxury has seen the global fan-base for football evolve with increasing television rights, and now some brands find soccer an attractive vehicle.

Around 234.7 million people follow football in Europe alone, according to Sport + Markt, a research and consultancy company in international sports business.

With matches showing in China and India, companies’ sights are set there and beyond. “Football is acting as a shop window for the luxury brands through the WAGs,” said Ron Cregan, business strategy head at brand communications agency Navyblue.
Luxury brands are using football to carry their names to emerging markets, where demand for high-status products is accelerating at a blistering pace.

“When you look at Eastern Central Europe, what you have there is a race of change in society, which is very fast. You can go from being a barrow-boy to a billionaire in 10 to 15 years,” said Navyblue’s Cregan.

“Luxury goods have become shorthand in emerging markets to communicate to people who you are,” he said.

Many players themselves have also embraced the desire to look good, encouraging luxury brands to seek a bigger share of the huge publicity associated with what Brazilian player Pele called the “beautiful game.”

Names such as Armani and Dolce & Gabbana have designed clothing for national teams as well as top-flight clubs across Europe and now top Swiss watchmakers Hublot and Ebel are getting in on the act. “The thing most guys can spend money on is a luxury watch,” Cregan said.

Hublot, bought this year by the world’s largest luxury group LVMH, will act as official timekeeper during Euro 2008, whose main sponsors include mass brands such as Coca Cola, Carlsberg and McDonald’s.

“It would have been a scandal if this event, which is probably the biggest event Switzerland ever got, would have been timed by a non-Swiss watchmaker, especially as Switzerland is known as the reference for watches,” Hublot chief executive Jean-Claude Biver said.

Hublot has produced 2,008 special-edition watches, each costing 15,000 Swiss francs ($14,550) and they have all sold out, Biver said. “We know that in luxury goods and in particular in watches, the more limited they are, the better they tend to do,” said Landsbanki Kepler analyst Jon Cox. “If you can find a peg for a limited edition...then there is obviously a market opportunity there,” Cox said.

The global luxury watch market is worth 18 billion euros, according to an estimate from Swiss bank Vontobel.

Although figures are hard to come by, margins in the luxury market are relatively high: Swiss Richemont’s specialist watchmakers unit posted an operating margin of 27.3% in 2007-08, compared with 23.8% at Nokia’s three cellphone business units in the fourth quarter of last year. Ebel, which sponsors English premier league team Arsenal and German champions Bayern Munich, has also brought out limited edition pieces for each of the two clubs, with one watch costing 9,900 euros ($15,440) and featuring a discreet club logo.

“Football is a strategy for us to make the brand visible worldwide on a very large scale,” Marc Michel-Amadry, Ebel’s vice-president of international marketing, said.

Luxury brands are using football to carry their names to emerging markets, where demand for high-status products is accelerating at a blistering pace.

“When you look at Eastern Central Europe, what you have there is a race of change in society, which is very fast. You can go from being a barrow-boy to a billionaire in 10 to 15 years,” said Navyblue’s Cregan.

“In order to communicate that you are not a barrow-boy anymore but a billionaire what you need is brand association. You buy the most expensive watch, the most expensive suit and the most expensive car,” Cregan said.

“Luxury goods have become shorthand in emerging markets to communicate to people who you are,” he said.

Emerging markets and the Middle East accounted for around 20% of Swiss watch exports in 2007, boosting sales at Swatch Group and Richemont. “Clubs like Arsenal have a huge following around the world,” said Ebel’s Michel-Amadry.

“When you have an Arsenal game and you have your advertising featured around the pitch, it is highly visible in the Middle East, highly visible in Asia and is highly visible throughout Europe.”

Football also ensures brands are seen in the right context and environment, so advertisements for these marques are not sandwiched between commercials for unrelated products during television programmes, Navyblue’s Cregan said.

“Thanks to football, the luxury brands don’t have local media issues in emerging markets. Hublot, for example, is embedded into Euro 2008. Their brand is out there with flashing lights and rockets. They don’t need to worry about their brand being presented in the wrong place,” Cregan said. The sport has come a long way from the steep, crowded terraces of the 1960s and 1970s Saturday afternoons, when the treat was a meat pie and kick-off was after a morning’s work. Today, corporates increasingly entertain clients in the VIP lounges of modern, high-tech stadiums designed by top architects such as Norman Foster, who designed Wembley. “Stadiums today are entertainment and presentation temples,” said Stephanus Tekle, senior consultant at Sport + Markt. The corporate boxes, VIP rooms and lounges give brands access to those people who have the purchasing power to snap up more upmarket goods, Ebel’s Michel-Amadry said.

The wealth of fans has also increased, said Navyblue’s Cregan, making it more attractive for high-end marques to target the game.

“The demographics of the football audience have changed dramatically over the last 10 to 15 years. The big driver has been the migration from a post-war working class base to a lower-middle class and then to a middle-class base in terms of the supporter profile,” Cregan said.

Soccer has also become more popular with families and women, giving brands more reach — especially as many, such as Armani, are also creating cheaper products that are more accessible to a wider audience.

“Women, men, children, old people, young people, billionaires, students — everybody is in football,” said Hublot’s Biver.