Luxury F&B ventures risk diluting brand identity

Luxury fashion brands like Chanel and Dior are expanding beyond retail.

Luxury fashion brands are expanding into the food and beverage (F&B) space, but while opening cafes, restaurants, and pop-up bars offers new ways to engage consumers, the shift presents significant risks, especially when not executed with precision.

Nobuko Kobayashi, EY Asia-Pacific Strategy Execution Leader, highlighted the fine line luxury brands must walk when entering the F&B sector. "Venturing into food and beverage for luxury maisons is not without risks," she warned. "A lot of attention to detail is needed, because instantly the dining experience can be communicated worldwide through social media."

The problem lies in the potential disconnect between a luxury brand’s established identity and its ventures into a sector with a vastly different operational model. The margins, operational dynamics, and customer expectations differ, and brands risk diluting their exclusivity by stepping into a highly competitive and diverse market.

Kana Shintani, Senior Food and Drink Analyst at Mintel Japan, said that the challenge is ensuring that these ventures align with the brand’s core values. If F&B offerings fail to reflect the luxury ethos, there’s a real risk of overextending, which can lead to a loss of focus and weaken the brand’s appeal.

However, the move into F&B is not without its strategic advantages, especially in Asia. Kobayashi noted that experiential marketing plays a crucial role in driving this trend. "Experiential marketing is a little bit of counter force against online marketing. It is about being on site, being in the moment, and tasting something," she explained.

For younger consumers, particularly in Asia, such as Generation Z, these immersive experiences offer a way to engage with luxury brands without the hefty price tags associated with high-end fashion.

Yet, balancing this entry-level engagement with maintaining a sense of exclusivity remains a core challenge. "Luxury brands can expand their brand experiences by venturing into food and drink, offering consumers new ways to engage with the brand," Shintani acknowledged.

Japan has become a focal point for luxury F&B ventures, driven by a deep appreciation for quality and craftsmanship, as well as a booming tourism industry. Kobayashi highlighted, however, that even in such an ideal market, brands must tread carefully to avoid overextension and maintain the premium experience they are known for.