Luxury Market Hits Trillion Euro Mark Amid Shifting Consumer Tastes

The global market for luxury products and services is projected to reach approximately €1.440 trillion in 2025, maintaining stability despite prevailing economic and geopolitical uncertainties and varied performances across different sectors. This outlook was unveiled at the 2025 Altagamma Observatory, the annual event hosted by Altagamma, the association representing Italy’s premier luxury brands, held on November 20 in Milan. A significant trend noted is the continued shift towards experiential consumption, while long-term forecasts for the broader luxury market remain largely positive.

The personal luxury goods market is expected to mirror this stability, with a 2025 forecast of €358 billion, which, while showing a 2% decline at current exchange rates, remains flat at constant rates, aligning with the overall market trend. These projections and insights for 2025 and the outlook for 2026 were derived from two key studies presented at the event: the Altagamma Consensus 2026, compiled with input from 19 Italian and international financial analysts and presented by Stefania Lazzaroni, managing director of Altagamma; and the Altagamma-Bain Worldwide Luxury Market Monitor 2025, curated by Claudia D'Arpizio and Federica Levato, senior partners at Bain & Company.

Both studies depicted a resilient market navigating substantial structural transformations. These changes are primarily driven by evolving luxury consumer purchasing behaviors, who increasingly prioritize experiences over material products, and by the growing importance of the relationship between price and value. Regional performances vary significantly across the globe. The Middle East demonstrates steady expansion with a projected growth rate of 4%-6%, while the Americas are showing signs of recovery, with growth estimated between 0% and 2%, buoyed by domestic spending and rising average purchase values. In contrast, Europe is experiencing a slowdown, with losses between 3% and 1%, and China remains weak, projected to be down between 8% and 6%. Japan, following an exceptional 2024, is also slumping, with a similar decline of 8% to 6%.

Performance differences are also evident among product categories, influenced by a clear polarisation between high-end and more affordable market segments. In personal luxury, jewellery is a strong performer, growing between 4% and 6%, alongside eyewear, which is expanding by 2% to 4%. Conversely, leather goods and footwear are experiencing declines of 7% to 5%. Across the automotive sector, sales volumes for cars are falling in all price ranges, though higher-end sports cars are performing relatively better. The yacht-building sector is enjoying vigorous growth, while furniture design remains stable. Premium wines and spirits are generally struggling, with notable exceptions in premium champagne and Italian red wines.

Looking ahead, the Altagamma Consensus study for 2026 anticipates a growth rate of approximately 5% for the broader luxury sector, aligning with a longer-term forecast of 4% to 6%. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the sector are expected to rise by 5%, attributed to cost optimisation measures and the continued resilience of the US, European, and Middle Eastern markets. A potential positive catalyst in this scenario could be renewed Chinese consumer confidence. However, the generally weak performance of the dollar’s foreign exchange rate could penalize exports from other countries.

The US market is expected to remain a solid anchor for the industry, largely insulated from tariff impacts. The Middle East is also projected to maintain its strength, benefiting from consistent tourism flows and global real estate investments. Despite challenges in France and Germany, the European market is set to remain resilient, while Asia and China are forecasted for moderate growth. For personal luxury goods in 2026, physical retail will continue to be the preferred channel and is expected to grow significantly, alongside e-tail, while the wholesale channel’s importance is set to diminish further. A notable exception is the strong performance expected from luxury outlet stores, both physical and online, which are well-positioned to leverage unsold inventory from previous seasons. Category-wise, 2025 has created conditions for moderate, generalized volume growth, which is expected to consolidate in 2026, with jewellery specifically projected to perform exceptionally well, reinforcing its status as a safe-haven asset.

Matteo Lunelli, President of Altagamma, highlighted that "The luxury market has remained stable in 2025 at a value of €1.44 trillion, despite going through a complex phase, marked by more selective consumption and China’s subdued momentum. Experiential consumption is growing, especially when linked to well-being and longevity, while aspirational consumers are struggling. Price dynamics require brands to be extremely careful, as they face tariffs, a weak dollar, and high energy prices." He added, "we’re expecting 5% organic growth in 2026. In this scenario, Italy’s high-end sector, which accounts for over 7% of national GDP, continues to show its resilience, thanks to the entire industry’s creativity and manufacturing excellence. It is a sector that, now more than ever, must be defended in the name of legality, transparency and rule of law, in order to protect its worldwide reputation. We’re active with the government and other associations to establish a new industry-wide pact, confident that our companies are working diligently and responsibly. Italy must continue to drive the luxury sector, safeguarding a virtuous ecosystem that combines entrepreneurship, craftsmanship, innovation and culture: A true economic and cultural heritage that must be valued.”

Claudia D'Arpizio and Federica Levato, senior partners at Bain & Co. and authors of the Luxury Market Monitor 2025, articulated that "after the era of unbridled shopping, a new season is starting for the luxury sector, one in which experiences, emotions and values are the genuine engine for growth.” They continued, "the market remains robust, but it’s moving within an increasingly complex and interdependent global context. The next phase will be driven by quality, ethics and innovation: Less expansion, more relevance. Brands are redefining their boundaries, expanding into adjacent territories – from food to wellness – and are being called upon to re-establish a genuine bond with aspirational consumers, while preserving consistency and meaning.” They further emphasized that "the future of luxury will belong to those who’ll be able to evolve from scale to precision, from following trends to dictating them. This is a moment of truth: Luxury is at a crossroads between exclusivity and inclusivity, between profit and purpose. Only those able to combine creativity and responsibility will manage to transform the transition into long-term performance." The industry’s fundamentals are robust, with an expected annual growth rate of 4% to 6% for personal luxury goods, bolstered by expanding demand. This could see the market value of personal luxury goods reach between €525 billion and €625 billion by 2035, while total overall luxury spending could amount to €2.2 trillion to €2.7 trillion.

Altagamma, established in 1992, serves as the association for Italy’s leading companies within the high-end cultural and creative industries, dedicated to promoting Italy's unique excellence and distinctive lifestyle globally. With a diverse cross-sectional membership of 124 brands spanning fashion, design, jewellery, food, hospitality, automotive, and yacht-building, Altagamma’s mission is to foster the growth and competitiveness of Italy’s cultural and creative sectors, thereby contributing significantly to the nation's economic development. The luxury products and services sector in Italy is a substantial economic force, valued at €144 billion, and accounts for 7.4% of the national GDP. Over 70% of the sector’s revenue is generated from exports, and it sustains a direct and indirect workforce of 1,922,000 individuals, representing 8.2% of total employment in Italy.