The tsars that ate Paris

Money talks and this year's biggest spenders have conspicuously Russian accents.

Money talks and this year's biggest spenders have conspicuously Russian accents. Fearful of a return to hard times, they're buying up the world's luxury goods in spectacular fashion

During a frenzied night of bidding at Christie’s London auction house in February, records broke when Francis Bacon’s Triptych 1974–77 went under the hammer for £26.3 million ($56.3 million). The price caused rumours to swirl that the successful bidder was Roman Abramovich, the 41-year-old Russian billionaire and Chelsea Football Club owner, and that he’d bought the masterpiece for his 26-year-old girlfriend, Daria “Dasha” Zhukova.

A few years ago Abramovich’s show of wealth might have been considered vulgar. However, in this year of consumer confidence crisis and global credit crunch, romance “billionaire-style” is what luxury goods companies have been praying for. “The new Russians only understand luxury and for them it has to cost a lot to be worth anything,” says Robyn Holt, former chief of Conde Nast’s Russian operations and the force behind the launch of Russian Vogue in 1998 and Glamour in 2004. “Their sense of worth is being able to display what they’ve got. The Russians have always been great showmen; they love to show off and have leapt into luxury with both hands. They need all the earmarks to say, ‘We’ve got money’.”

Indeed, Abramovich has the money, along with the other 52 Russian billionaires worth over $301 billion, and an estimated 103,000 millionaires collectively worth more than $716 billion. The traditional Russian word for luxury is roskosh, but there’s nothing old-fashioned about the spending sprees these modern-day tsars are on. Russia is undergoing yet another social revolution, one fuelled by a cocktail of enormous wealth mixed with ferocious spending and an appetite for beauty. And every luxury goods firm is willingly playing couture courtesan.

In 2003, Louis Vuitton collaborated with Japanese artist Takashi Murakami to design a range of handbags and accessories that reinterpreted the brand’s classic monogram print. These became global bestsellers and the collaboration was seen as a nod to the strength of the Japanese market, which at the time accounted for 35 per cent of Louis Vuitton sales. Then the price of oil started to rise and, suddenly, it was the Russians with the deepest pockets. Its elite are gleefully dipping into riches gained through oil, aluminium, gas and real estate in an effort to buy back time they lost during the Soviet era.

Gucci clearly understand the Russians’ spending power. In January, the company’s creative director, Frida Giannini, presented a Russian-themed show, complete with fur-drenched jackets, for Autumn/Winter 2008/09. One of the must-have items was the Babushka carpet bag. Despite the present economic crisis, some still have money to buy style, perhaps even entire designer collections.

Such is the growing influence of wealthy Russians in Paris that the city’s snobbier residents have started describing avenue Montaigne, the top-flight fashion neighbourhood, as “little Moscow”. At designer institutions Christian Dior, Valentino, Chanel, Bulgari, Harry Winston, Louis Vuitton and Christian Lacroix, “fashionistkas” are dropping serious cash.

During recent fashion weeks, front-row politics have erupted over Russian magazine editors, buyers and wealthy clients taking prime position where English and American power players once sat. Holt says the old guard should get used to the luxury tsars. “They are very quick and great opportunists,” she says. “They’re making every day count. That’s why they take risks and buy up big because tomorrow it may not be there. They maximise what they do: spend big and dress big.”

It appears the Russian psyche has made its cashed-up citizens recession-proof, with a taste for spending unleashed by the removal of restrictions. “The Russians are in and out very fast,” reveals Holt. “It’s ‘Give it to me, show it to me’ because they’ve never had the opportunity to do it. They have been squashed by Lenin and Stalin and now they can go, ‘This is all about me’.”

If Russia has become a consumer superpower, then surely Moscow must be one of the world’s shopping capitals? Less than a block from Red Square are the growing fashion districts of Stoleshnikov Lane (Hermes, Louis Vuitton, Agent Provocateur) and Tretyakovsky Passage (Prada, Gucci, D&G), where the historical shadow of communism can barely be seen for the glint of diamonds and Bentleys. There are so many Rolex watches and black American Express cards being flashed around you could be mistaken for thinking you’re on LA’s Rodeo Drive.

Certainly, the success of last year’s lavish Millionaire Fair is proof of Moscow’s status. Though other Millionaire Fairs are held in Shanghai, Cannes and Amsterdam, Russia’s is the biggest. Touted by organisers as a “landmark in the luxury event calendar”, the 2007 expo opened the floodgates for a $793 billion spending spree. In excess of 40,000 visitors snapped up diamond encrusted mobile phones for more than $1 million each and orders went in for Bugatti Veyron cars costing $2.5 million. Even a gold-threaded mattress set worth $75,000 didn’t cause Moscow’s political, business and cultural elite to lose any sleep.

Dana Thomas, Paris-based style and cultural reporter for Newsweek and author of best-selling book Deluxe: How Luxury Lost its Lustre, agrees modern Russians are channelling the acquisitive appetites of their fallen tsars. “Luxury, without a doubt, is more important to Russians than even fashion,” she says. “I don’t think Russia is a fashion superpower yet in terms of creativity but, from a consumption standpoint, the Russians are big shoppers. And when they shop, they shop in large volumes.”

Moscow millionaires have even drawn comparisons to the excesses of Dallas in the 1980s, an observation tinged with irony given the role reversal between the two countries. In the US, the luxury market has slowed dramatically this year across many categories, including designer apparel, as consumers have cut overall spending. According to Forbes magazine, this follows the largest pullback in American consumer spending in decades, perhaps as much as $200 billion to $300 billion, or up to three per cent of personal income. Meanwhile, offsetting the weakness in the West are the fast-growing, emerging markets of Russia, China and, to a lesser extent, India, where the freshly rich are crucial sources of revenue for luxury labels.

Predictably, Russia’s wealth has spawned a set of young, uber rich beauties making their presence felt on the global social circuit. Prime candidate for the title of local “It” girl is Dasha Zhukova, gallery owner and designer behind fashion line Kova & T, which she shares with Kristina Tang. Then there are Mikhail Gorbachev’s granddaughters, Ksenia and Anastasia Virganskaya, who hang out with Donatella Versace and have private shopping sessions at leading boutiques.

But none compare in ambition and brazenness to the 16-year-old fashion designer Kira Plastinina, who opened a chain of self-titled shops last year with the financial backing of her businessman father, Sergei Plastinin. She is rumoured to have paid Paris Hilton $US2 million just to attend her fashion show.

Some economists believe that if it hadn’t been for the high price of oil, Russia would be in a very dire situation post-perestroika. But for now the only feeling of desperation Russia’s wealthy have is to quench their thirst for luxury brands.