SAO PAULO, Sept 9, 2009 (AFP) - The global luxury market has been badly wounded by the financial crisis and will not fully recover for at least another three years, an international conference on the sector heard in Brazil on Wednesday 9 September.

Chanel, an established "absolute" brand was seen as a likely winner among well-heeled but newly cautious buyers - Photo: www.chanel.com

This year is likely to show a slump of up to 10 percent in luxury sales, to around 154 billion dollars worldwide, Gabriele Zuccarelli, a senior analyst with the international business consulting firm Bain and Company, told the Atualuxo conference in Sao Paulo.

"2009 won't be a good year," he said.

The medium term promised only some modest pick-up, he said, with next year's sales expected to edge up to 156 billion dollars next year, 162 billion in 2011 and around 174 billion in 2012.

The premium products looked at included real estate, yachts, technology, cars, services, hotels and restaurants, as well as personal items such as clothing, cosmetics and jewelry.

Sales of luxury apparel were the worst affected by the credit crunch that started at the beginning of 2008, Zuccarelli said, putting that segment's decline this year at 15 percent.

The shift was towards "quality and durability" in garments rather than transient fashion, he said.

Established "absolute" brands Chanel, Armani and Hermes were seen as the likely winners among well-heeled but newly cautious buyers, while "high fashion content" labels like Prada, Valentino and Versace would struggle.

Italian company Bulgari was among the worst performers with an expected 20-percent slump in sales, he said.

High-end consumers in the United States, Europe and Japan were spending less, he explained, with high net worth Americans in particular worried about their financial future.

Only China showed a continued growth in appetite for expensive and exclusive products, with seven percent growth forecast this year.

Even so, "it's clear that the outlook is bad," Zuccarelli said.

He advised companies in the sector to get closer to their customers, to selectively shore up prices amid pressure for sales to clear inventories, and to streamline where possible -- but without aggressive cuts to personnel or marketing.

The Atualuxo luxury business conference, running over three days to Friday 4 September, gathered 30 speakers from well-known companies and brands in the sector, including Audi, Pernod Ricard, Interbrand and Moet Hennessy.