Despite a decline in the incomes of Poland’s wealthiest individuals, the value of the Polish luxury goods market continues to grow. Last year, it increased by 12.2% year-on-year, reaching 42.4 billion PLN, compared to an inflation rate of 11.4%, according to the KPMG report “The Luxury Goods Market in Poland. New Dimensions of Luxury.” The largest segment remains premium and luxury cars, with a market value of 25 billion PLN, a 7.1% year-on-year increase. The luxury hotel and spa sector experienced the highest growth, at 23.8% year-on-year, with an estimated value of 5.8 billion PLN. In 2023, Poland accounted for nearly one-third of the luxury goods market value in Central and Eastern Europe.
Wealthy Poles Earn an Average of 113,000 PLN Monthly – A Decline in the Incomes of the Wealthiest
The luxury goods market is shaped by the purchasing power of its consumers. For the report, individuals surpassing the second tax threshold were categorized into the following groups: affluent individuals with a gross income of over 20,000 PLN per month, wealthy individuals earning over 50,000 PLN gross per month, and very wealthy individuals with monthly earnings exceeding 83,300 PLN gross, meaning an annual gross income of over 1 million PLN.
In Poland, in 2022, the number of individuals surpassing the second tax threshold, those with annual gross incomes equal to or greater than 120,000 PLN, increased by 51% year-on-year to 1.5 million people. Their earnings reached nearly 376 billion PLN, a 9.6% year-on-year increase. Although the total earnings of individuals exceeding the second tax threshold increased in 2022, the incomes of the group classified as affluent, earning at least 20,000 PLN gross monthly, slightly decreased. The number of individuals with incomes above 20,000 PLN gross per month rose to 441,000, a 37.7% increase compared to the previous year, but their total earnings were nearly 220 billion PLN, a 0.2% decrease year-on-year. In 2022, individuals in this group earned an average of 41,400 PLN monthly.
Another significant target group for luxury goods producers is wealthy consumers, defined as those earning over 50,000 PLN gross per month. In 2022, there were slightly over 83,600 such individuals in Poland, a 1% year-on-year increase, but their total earnings decreased by 12.7% to just under 114 billion PLN. The most important target group for luxury goods companies remains the very wealthy, with annual gross earnings above 1 million PLN. This group decreased by 4.6% in 2022 to just under 35,000 people, with their earnings dropping by 15.6% compared to 2021, reaching 79 billion PLN.
In all described groups, average monthly gross incomes also declined. Affluent individuals earned an average of 41,400 PLN (-28% year-on-year), wealthy individuals 113,300 PLN (-14% year-on-year), and very wealthy individuals 187,200 PLN (-11% year-on-year).
There is a continuous increase in the number of affluent individuals in Poland, a trend that has persisted for many years. Interestingly, despite raising the tax threshold, the number of people earning over 120,000 PLN annually has increased. This growth can be attributed to high inflation and significant wage increases. Additionally, the influx of well-paid Ukrainian citizens employed in international corporations in Poland may have contributed to this increase. There has been a noticeable decline in the number of individuals who previously taxed their business income at a flat rate of 19%. It can be inferred that new, attractive conditions for general income taxation, such as higher tax thresholds, significant tax-free amounts, and joint tax returns and deductions, have led to a switch to general taxation. This trend may also apply to individuals who previously used lump-sum taxation, says Andrzej Marczak, Partner and Head of the PIT Team at KPMG in Poland.
90,000 Poles Have a Net Worth Exceeding 1 Million USD
At the end of 2022, Poland had nearly 90,000 individuals classified as High Net Worth Individuals (HNWI), with net assets of at least 1 million USD. This represents a decrease of nearly 10,500 individuals, or about 10%, compared to 2021, returning to the 2020 level. Among 19 selected European countries, Poland ranked above only Greece and the Czech Republic in absolute numbers of HNWI in 2022.
The decline in the number of Poland’s wealthiest individuals, categorized as HNWI, aligns with the global trend and may be caused by the appreciation of the US dollar against the Polish zloty. Interestingly, the number of the most affluent subgroup within this category, individuals with net assets exceeding 50 million USD, increased by nearly 2% year-on-year. This again supports the thesis that “the richest get richer the fastest,” adds Andrzej Marczak, Partner and Head of the PIT Team at KPMG in Poland.
Furthermore, recent data from the National Bank of Poland (NBP) indicates that the real value of Polish wealth in 2023, as in the previous year, decreased due to high inflation, amounting to 2,256 billion PLN at the end of the period. The main part of Poles’ liabilities remains long-term loans and credits, valued at over 749 billion PLN, accounting for 91.7% of total debt. The structure of Polish households’ assets remained largely unchanged. The largest part consists of deposits, which were worth 1,239 billion PLN at the end of 2023, representing nearly 40% of assets, an 11.5% increase compared to the previous year.
The total amount of deposits and cash held by Poles is close to the market capitalization of all companies listed on the Warsaw Stock Exchange. This potential in Polish wealth could be directed toward investments that protect against inflation. According to KPMG’s analysis, shares of luxury goods sector companies have performed even better than broad market indices, comments Tomasz Wiśniewski, Partner in the Valuation Team at KPMG in Poland.
Structure of the Luxury Goods Market – All Segments Have Recovered from Pandemic Losses
The total value of the luxury goods market in Poland increased by 12.2% year-on-year in 2023, reaching 42.4 billion PLN. All segments analyzed in the report – cars, hotel and spa services, clothing and accessories, real estate, alcohol, cosmetics and perfumes, and jewelry and watches – achieved higher values at the end of 2023 than before the pandemic.
Producers of premium and luxury cars captured the largest share of the luxury goods market in Poland in 2023 (59%), with a market value of 25 billion PLN, a 7.1% year-on-year increase. Polish buyers registered 22,200 more premium category cars than in the previous year, a 23.2% year-on-year increase. Despite a small market share in terms of quantity (0.3%) and value (1.4%), luxury cars also saw a 5.6% year-on-year increase in sales. Interestingly, there is a growing interest in electric vehicles in the Polish premium and luxury car market, with their share of total sales rising from 5% to 8.1% between 2022 and 2023, especially in the premium segment.
The luxury hotel and spa market ranked second in terms of sold service value for the first time, increasing by 23.8% year-on-year to 5.8 billion PLN in 2023.
The estimated value of the luxury clothing and accessories market in Poland in 2023 was 3.8 billion PLN. The market for luxury clothing and accessories in Poland increased by 573 million PLN in 2023, a 17.7% year-on-year increase. Clothing dominates the luxury clothing and accessories market (62.8%), with accessories and additions accounting for 20% and footwear for 17.2% of the market.
The value of the premium and luxury real estate market in Poland continues to grow despite the current economic slowdown. It increased by 9% year-on-year in 2022, and forecasts for 2023 suggest a further 15% year-on-year increase to 3.26 billion PLN. While Warsaw remains the main center for premium and luxury real estate, the Tricity area is gaining increasing importance. 27% of luxury apartment offers are concentrated in the Tricity area, with the highest transaction price per square meter recorded in Gdynia in 2023, at 66,100 PLN.
Economic instability has increased interest in high-standard real estate, considered an effective way to protect capital. Poles are increasingly investing in such properties both domestically and abroad, with Spain being a top destination. In 2022, Poles purchased about 3,000 apartments in Spain, a 161% year-on-year increase, with the Costa del Sol coast and the Canary Islands being the most popular. Portugal has also been gaining popularity in recent years.
The sectors with the highest growth in value in 2023 compared to the previous year among selected luxury goods market segments in Poland were the hotel and spa (23.8%) and alcohol (20.5%) sectors.
The outlook for the luxury goods market in 2024 is optimistic, with a predicted growth of 21.1% year-on-year.
Stock Market Success for Premium Brands
As a reference point for the performance of listed companies in the analyzed luxury goods market segments, KPMG in Poland used the S&P Global 1200 index, which aggregates the
stock indices of companies listed on exchanges in over 30 countries, covering about 70% of the global market capitalization. As of the end of March 2024, the value of the shares of companies included in this index was over 65 trillion USD.
Although the luxury goods market is not entirely immune to economic fluctuations and has shown greater short-term volatility recently, it remains strong in the medium term after three years of challenges such as the pandemic, geopolitical instability in the region, and high inflation. Compared to the broader market, the luxury goods market is more resilient to macroeconomic challenges. This also confirms the thesis that in times of economic and social uncertainty, companies in this sector perform much better than the overall consumer goods market.
Trends in Luxury Goods Consumption
The average amount spent on premium purchases and shopping patterns are also changing. In 2023, the average consumer in Poland spent 863.1 PLN on luxury goods, an increase compared to 547.62 PLN spent in 2020. Before the pandemic, these expenditures averaged 602.4 PLN.
A significant role in the development of the luxury goods market in 2023 was played by the calm approach of affluent consumers to economic difficulties and their return to activities such as travel, shopping, work, and social life. Affluent tourists once again eagerly used catering and hotel services, stimulating the luxury services market in Poland. Additionally, wealthy refugees from Ukraine further boosted the Polish luxury goods market. Companies serving the middle class and affluent individuals hired employees who spoke Ukrainian. The expenditures of wealthy immigrants coming to Poland helped mitigate the negative supply-side effects of high inflation.
Retailers’ evolving approach also drove the development of the luxury goods market, adopting new forms of sales, such as pop-up stores and transactions based on digital solutions. The use of virtual reality and artificial intelligence in the sale and marketing of luxury goods responds to the expectations of younger generations, who are gaining increasing importance in Poland as well. The generational change among buyers necessitates adapting company strategies to the expectations of new generations. Inclusivity, accessibility, and offer personalization are becoming key to meeting diverse consumer preferences.
Luxury goods companies face challenges that require analysis and adaptation to changing market trends. Particularly significant is the growing “no logo” trend and the category of “experience-based goods.” Merely owning luxury items may not suffice. Travel, cultural events, and exclusive meetings are gaining importance, allowing luxury goods companies to build relationships with clients in new areas. The growing interest of consumers in unique experiences and collecting exceptional emotions opens up opportunities to create innovative services and products, comments Tomasz Wiśniewski, Partner in the Valuation Team at KPMG in Poland.
About the Report:
The report “The Luxury Goods Market in Poland. New Dimensions of Luxury” is the 14th edition of KPMG’s publication on the luxury market in Poland. For the report, a luxury good is defined as any good branded as luxurious in a given market or one that, due to its uniqueness, high price, etc., acquires a luxurious character. The report also utilized data from Credit Suisse, Cenatorium, Euromonitor International, the Central Statistical Office, the Ministry of Finance, the National Bank of Poland, the Polish Automotive Industry Association, and S&P Global Market Intelligence.
For comparative purposes, the report recalculated taxpayer income data for 2021 according to the new tax scale.
