June 12, 2021

Why France has more ultrariches than China or Germany

After the United States, it is in France that there are the most multi-billionaires in the top 30 of the world’s greatest fortunes. And it is not by chance. Explanations.

+ 439%. It is the spectacular increase in the heritage of French billionaires between 2009 and 2020. And after China, which is a booming economy, it is in France that the heritage of the ultra-rich has grown the most during this decade. By way of comparison, the cumulative fortune of American billionaires has increased by 170%, that of the Germans by 175%, those of the British by 168% … France is therefore an exception.

If the French billionaires got richer, it was the richest of them who benefited the most. In the top 30 of the Bloomberg ranking of the greatest fortunes in the world, there are now five French people. From Bernard Arnault (3rd fortune on the planet) to the Wertheimer brothers owners of Chanel (30th) via Françoise Bettencourt Meyers (11th) the heiress of L’Oréal, France is the second country with the most representatives in classification.

Far behind the United States and its 17 billionaire but ahead of China (four), India (two) or Spain. Neighboring countries with comparable economies like Germany, the United Kingdom or Italy have none. If we widen to the top 100, the first Italian (Giovanni Ferrero, founder of the food group) is 39th, the first German (Klaus-Michael Kuehne) is 41st and the first Briton (James Dyson) is 50th. Estimated at 150 billion dollars, the heritage of Bernard Arnault thus exceeds by 50% that of all the German billionaires of the top 100.

Unpublished in the history of France

And this situation is unprecedented in history. In the Forbes ranking of millionaires in real time, two French people are among the ten richest people on the planet (Bernard Arnault and Françoise Bettencourt Meyers). Which had never happened.

Until the end of the 2000s, we did not find any French in these rankings which gave pride of place to the Americans. A few Europeans were sometimes in the top 10 but they were the Albrecht brothers (the founders of Aldi), the Spaniard Ortega (the creator of Zara) or the Swede Kamprad (the founder of Ikea).

This recognition of the French can be explained by the rise of luxury goods in the world and in particular in emerging countries. Until the 2000s, the greatest fortunes were those who had built empires in consumption and mass distribution, such as the founders of Ikea, Aldi or the Mulliez d’Auchan family in France. In 2004, for example, in Forbes’ top 10 greatest fortunes on the planet, there were six founders or heirs of distribution companies (Aldi and Walmart). There are no more today.

The past decade has seen the rise of players in tech, of course, but also in luxury. The latter market has exploded in recent years. According to Bain & Company, which carries out an annual study, sales of luxury products have almost tripled in 20 years, going from 108 billion dollars in 1999 to 281 billion dollars in 2019. A growth which accelerated in the 2010s with the emergence of a wealthy class in Asia. The luxury market grew by an average of 7.5% per year during this decade.

The Dom Pérignon stronger than the iPhone?

And if France does not have a technological flagship, it is the world champion in luxury. In the world top 100 of large luxury groups, the nine French players hold a 28.3% market share according to Deloitte, far ahead of the United States, Switzerland or Italy. French luxury goods now export to 180 countries with an export rate of 90%.

A booming sector with insolent margins. They are between 30 and 40% on average when they do not exceed 1%, for example in large food distribution.

All the ingredients are therefore there to drive up the share prices of listed companies. Thus in a few years, luxury has taken power on the Paris Stock Exchange and the trend has increased with the pandemic crisis. Now the three companies with the largest market capitalization are from luxury goods: LVMH, which has exceeded 300 billion euros. L’Oréal, which is close to 200 billion. And Hermès, which crossed the 100 billion euros mark for the first time in February.

The combined market capitalization of what is now called “KOHL” (Kering, L’Oréal, Hermès, LVMH) has fallen from 513 billion euros at December 31, 2019 to more than 710 billion today (after a low in of the crash of last March). An increase of 38% which led to increases in the assets of their main shareholders.

And this increase is probably not over. Luxury should continue to democratize over the next few years. The market is expected to grow from 390 million buyers worldwide in 2019 to 450 million in 2025 according to Bain & Company.

“Can you say that in twenty years, people will still be using an iPhone? Maybe not […]. I can guarantee you on the other hand that in twenty years, they will still drink Dom Pérignon “, assured Bernard Arnault in 2014 on CNBC.

Since this release, the richest man in Europe has multiplied his fortune by five.