Trends Contemporary art Market USA

Can their love last forever?

The love affair between the art world and luxury brands has dominated the decade, but the romance may be cooling

Branding: Takashi Murakami and Jeff Koons are masters of the art

Have there ever been better bedfellows than art and luxury? Both are based on the sale of objects that have little inherent use or value, but which retail at high prices. For both, branding is vital. They both rely on the wealth of the world’s richest to propel profits at the top end, and on the middle classes for their bread-and-butter business. But this “did not mean historically that the two were connected in practice,” says the Dutch economist Olav Velthuis. “What is new is the strong overlap not just in terms of logic, but in terms of the people involved.”

The traffic between the two ranges from brands that support museum shows or art fairs to those that commission artists or simply pay for parties. More critical yet is the influence on the art world of powerful magnates such as François Pinault and Bernard Arnault, the heads of luxury conglomerates PPR and LVMH respectively. The two worlds became particularly close during the last boom.

“You can’t talk about art in the 2000s without mentioning bling, and luxury is at the heart of that. Artists, as much as everyone else, wanted to be in a private jet,” says Gregor Muir, the director of London’s Institute of Contemporary Arts. Million dollar sales of contemporary and Modern art garnered international press attention. Meanwhile, artists, dealers and auction houses took the Warholian notion of art as business and pushed the boundaries of what it means to be a brand, reaching an apotheosis with Damien Hirst’s 2008 auction, “Beautiful Inside My Head Forever”, at Sotheby’s, London, for which the artist consigned work directly. The sale took place shortly after Louis Vuitton set up shop inside public institutions including the Los Angeles Museum of Contemporary Art and the Brooklyn Museum as part of an exhibition dedicated to the artist Takashi Murakami, whose previous collaboration with the brand resulted in a range of very expensive handbags. Moneymaking became a form of art.

The excess has not abated with the recession because there are more super-rich than ever, and they have more money. The distribution of wealth has shifted upwards since 2008—the number of high-net-worth individuals (defined as those who have at least $1m in divestible assets) reached its highest level last year of 11 million people, holding an estimated $42 trillion, according to a report by Capgemini/RBC Wealth Management. “Contemporary art and luxury goods have been united in the lifestyles of a new economic elite,” Velthuis says.

The locations of the elite are changing, as are their spending habits. Those in newly rich nations spend more on luxury goods such as wine, watches, cars and art than the wealthy in the West. A survey of 2,000 of the world’s mega-rich by Barclays Wealth found that 18% of respondents in the United Arab Emirates held their wealth in these goods, as did 17% of Chinese and Saudi Arabians and 15% of Brazilians, compared with 9% of Americans. “As new money comes in, the connection between art and luxury will become closer,” says Tim Etchells, the co-founder of the Art HK fair and the new contemporary and Modern art fair, Art13 London.

“Luxury goods have followed high-end art because that’s where the wealthy individuals are,” says the economist Don Thompson. The backing provided by luxury brands to public institutions has filled the crevasse caused by government cuts, while the art market has increasingly taken on the branding characteristics of the luxury business.

“I wish I was in luxury goods because then I could just call the factory and say, ‘I need 10,000 more of whatever.’ But I can’t—because then it’s not art, it’s something else,” said dealer Larry Gagosian in a recent interview with The Wall Street Journal. Nonetheless, the prolific production of some artists within Gagosian’s stable suggests more parallels than the dealer admits. Indeed, his gallery model resembles a high-end fashion house, with 12 branches across the globe, as well as several “pop-up” spaces.

However, a chill is spreading through the luxury sector as major brands announce price warnings. Burberry lost $1bn, or 20%, of its stock value in September. Mulberry shares fell sharply last month after the company announced a profit warning. Both companies blamed this, in part, on slowing demand in China, which has been a driver of growth in the art market, too. Burberry’s finance director, Stacey Cartwright, says there has been a decline of so-called “aspirational” middle class shoppers. She blames the company’s shrinking margins on this erosion. The art trade should take note. While the top end of the market is not much affected by the woes of the middle class, a healthy mid-section is vital for long-term health.

Robert Storr, the dean of the Yale University School of Art, also sounds a note of caution. “Artists who consider marketing themselves should think twice. Warhol had an instinctive grasp of just how to play the game and played it with genius. Lesser talents may, in the short term, laugh all the way to be the bank. But in the long term they may wake from their pipe dreams of fame and fortune as ‘period’ laughingstocks while their work floods the flea market.”

To read more from the Art & Luxury focus in our December issue, pick up a copy on newsstands or subscribe to our digital or print editions.

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Comments

18 Dec 12
16:16 CET

DAVID SCHWARTZ, CHANNEL ISLANDS, CALIFORNIA

It's Art if it hangs on a wall. It's Good Art when it sells !" schwARTZ

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