Navigating Product Diversification in India’s Luxury Market

India’s luxury goods market, valued at $10.01 billion in 2024 with a 6.37% CAGR through 2033, spans fashion, jewelry, automobiles, beauty, gourmet, private aviation, and real estate, making it a dynamic hub for luxury product lines. Product Diversification drives growth but risks brand dilution if mismanaged. The value chain global brands, distributors, boutiques, e-commerce, and regulators (DGFT, BIS, Customs, RBI) faces pressures from Tier-2/3 demand, UHNI/HNWI growth, and Gen Z’s digital influence prioritising experiences and ethics. This article equips senior leaders with strategies to balance Product Diversification with brand prestige, mitigating growth risks.

Product Diversification: Recent Developments (2025)

• Key trends shape Product Diversification in luxury:

1. New Launches: Global brands introduce luxury product lines with Indian motifs, like jewelry and lightweight fabrics, aligning with local preferences.
2. Crossover Categories: Fashion houses expand into beauty and fragrances (e.g., ARKS fragrance launch, Guess Jewellery via Timex), boosting Product Diversification.
3. Licensing Shifts: Multi-brand retailers adopt private labels, enhancing SKU differentiation for luxury product lines.
4. Regulatory Changes: The expanded TCS on luxury goods above INR 10 lakh (April 22, 2025) impacts pricing, while BIS enforces stricter labeling for Product Diversification.

1. Key Risks in Product Diversification

• Product Diversification introduces growth risks:

1. Brand Dilution: Inconsistent or mass-market luxury product lines weaken brand prestige, eroding consumer trust.
2. Channel Cannibalisation: Overlapping categories reduce premium SKU sales, risking profitability.
3. Inventory Risk: Overproduction from Product Diversification leads to discounting, causing brand dilution.
4. Regulatory Mismatches: Labeling, BIS certifications, and trademark issues complicate new luxury product lines.
5. Consumer Confusion: Excessive diversification blurs brand clarity, undermining exclusivity.

2. Strategic Analysis Using Hybrid Consulting Lens

• A hybrid approach mitigates growth risks in Product Diversification:

1. Growth Strategy: Curate luxury product lines with heritage-led storytelling. Limit diversification to high-margin, adjacent categories. Pilot extensions via pop-ups or DTC e-commerce to test Product Diversifications.
2. Financial Strategy: Conduct ROI analysis for new categories. Model margin impacts and stress-test markdown risks to avoid brand dilution.
3. Legal Advisory: Secure trademark exclusivity for luxury product lines. Navigate BIS norms for certifications and enforce tight licensing to prevent IP dilution.
4. Technology Strategy: Use analytics to forecast niche demand, AI to analyse purchasing patterns, and blockchain to authenticate Product Diversifications and ensure provenance.
5. Talent & Brand Governance: Establish guardrails for expansion approval. Upskill creative teams to preserve brand ethos across luxury product lines.

Illustrative Examples

• Case Study 1: Kitchenware Misstep: A European fashion label’s 2024 kitchenware launch in India failed due to unclear luxury positioning and multi-brand store distribution, causing brand dilution and a 12% drop in brand prestige in Tier-1 cities.
• Case Study 2: Watchmaker Fragrance Success: A Swiss watch brand launched a fragrance line via exclusive pop-up collaborations with Indian designers. Product Diversifications achieved a 70% sell-through in six weeks, preserving brand prestige through controlled GTM.

Conclusion

Product Diversification fuels growth in India’s luxury market but demands discipline to avoid brand dilution. Strategic curation, premium storytelling, and a hybrid approach spanning growth, finance, legal, and technology ensure luxury product lines align with brand DNA. Senior leaders must prioritise Product Diversification strategies that mitigate growth risks to sustain brand prestige and drive long-term success.

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