Bag of Fortune
As far as solid long-term investments go, the Hermès Birkin is a safe bet
Forget shorting global markets, buying avenues of Manhattan real estate or snapping up bars of gold, if you want to make serious money, invest in a rare Hermès Birkin handbag. In May 2016, a Himalayan Niloticus Crocodile Diamond Birkin set a new record when it sold to an unknown phone bidder for HK$2.32 million (US$300,000) at a Christie’s auction. The London-based auctioneers described it as the “rarest, most sought-after” handmade bag, encrusted with diamonds while the buckle and trademark mini Hermès padlock are made of 18-karat gold.
This came less than a year after Christie’s sold a fuchsia diamond-encrusted crocodile skin Hermès Birkin in June 2015 to an anonymous buyer for a record US$222,912. It was the highlight of an extraordinary US$5.9 million sale of more than 300 handbags that saw another world record—that of the priciest Hermès Kelly bag, when a shiny black crocodile version sold for US$145,152.
For handbag novices who don’t know their Chanel from their Celine, Hermès is the brand to bag for a long-term investment. And to experience the highest possible peak of the handbag hierarchy, you buy a Birkin.
“Once upon a time, pensions were in funds,” says The Times fashion correspondent Hilary Rose. “Now the latest way to beat the stock market is to have a pension in the form of a handbag. Seriously. In the 35 years since it was created, the Birkin has gone up by 500 per cent. That’s a better return than gold and you can put your lipstick in it.”
According to a research study by Baghunter.com, between 1980 and 2015, the S&P 500 gave a real return average of 8.65 per cent and gold an average return of 1.9 per cent. “In the same time frame, Birkin handbags have increased in value year on year, offering an average increase in value of 14.2 per cent,” says Pénélope Blanckaert, director of Hermès Vintage and Fashion Arts at Artcurial, a French auction house that holds sales in Paris and Monaco.
SUBHEAD: The Birkin Mystique
One of the reasons why Birkins are so valuable is that unlike the mass manufacture of its rivals, Hermès still makes its products by hand. “Hermès bags are more than fashion accessories—they are art,” says Blanckaert. “Each bag requires 18 to 24 hours of work by craftsmen who assemble dozens of components by saddle stitch seam. All the bags keep a small percentage of superb imperfection involved in their production, which is an exception in the era of mass production.”
While Hermès was honing its position as the pinnacle of handbag art and in very limited numbers, other big brands were focusing on creating a bag of the season that would be forgotten, says Cyril Pigot-Kessler, European head of Handbags and Accessories Sales at Christie’s. Hermès has come to define timeless chic as well as personify its own values, Pigot-Kessler says. They have the best craftsmen in the world, they work with the best materials and they limit their output. Most of Hermès’ artisans specialise in traditional leather skills such as saddle making and only after years of working on small-scale pieces can they begin work on a Birkin. “Hermès bags are the highest form of luxury art, the Picassos of the handbag world.”
The scarcity of rare materials adds to the irresistible mystique. Exceptional skins such as “almost white” crocodile take decades to reach maturity, they must be unblemished and ethically sourced for international consumption. For just one bag, an average of four crocodiles with perfect scales may be required.
“Exotic skin Birkins represent the epitome of a luxury handbag,” says Max Brownawell, specialist for Luxury Accessories at Heritage Auctions in New York. “Porosus crocodile is the most valuable, with its small squares and symmetrical scales. After that are niloticus crocodile and alligator. Lizard is more rare than crocodile, but less valuable because it is delicate and warps and discolours over time. Ostrich is more common in Birkins than in Kellys.”
Then there is the added kudos of colour. “The colours are rare, almost magical,” says Blanckaert. “In Monaco, for instance, buyers want unusual colours—yellow, pink or strong coloured bags such as ‘Rouge Hermès’. Chinese clients are more likely to bid on red bags as red is considered lucky and they prefer smaller models.”
In 2011, Heritage Auctions sold a red crocodile skin Birkin with white gold and diamond hardware for US$203,150—at the time a world record for a handbag—once owned by a woman from Florida who had it as a trophy in her collection.
Brownawell stresses the importance of colour when it comes to big bag sales. “5P bubble-gum pink, which is no longer in production, is particularly desirable,” he says. “Other rare colours are only found in certain materials like matte nuage alligator, which is pure white, or Himalayan nilo crocodile, which tapers from white in the centre to grey on the outside. A few seasonal colours still have devout followings, such as blue hydra and blue Aztec, which were only produced for a very short time.”
Adding extra value to rarity is that legendary Hermès waiting list. Supply never keeps up with demand, connections must be made, brand loyalty demonstrated and impatient fashionistas—even those who can comfortably afford an entry-level US$10,000 Birkin—can end up waiting years for the bag of their dreams.
“The scarcity of the bag makes it more desirable than any other,” says Blanckaert. “Even if you can afford it, an Hermès bag is incredibly hard to get. That emotional factor plays a crucial role in the desirability of Hermès bags.”
The Waiting Game
The mystique is paying off. Hermès does not report how many Birkins are sold every year or what percentage they contribute to profit, but the company reported a year-on-year increase of 18 per cent in sales in 2015. With that in mind, it is no wonder the pre-owned market is thriving and handbag experts like Brownawell, Blanckaert and Pigot-Kessler are kept busy jetting around the world visiting the closets of wealthy women.
The specialists are now at the heart of a growing trend for pre-owned Hermès. Those who can afford a bag like a Birkin hate waiting, and with new models in short supply, there is an increasing number of auctions that cater to their whims.
Christie’s, for example, now holds handbag auctions in Paris, New York, Dubai and Hong Kong, and runs an online sales channel. The online giant Heritage Auctions has a successful accessories division and holds regular sales. Recently, a Hermès 30-cm matte white Himalayan crocodile Birkin with white gold hardware achieved US$185,000 at Heritage; a crocodile and black Togo Kelly sold for US$125,000; and a red, white gold and diamond Birkin went under the hammer for US$203,150.
Artcurial has been holding Hermès vintage auctions since 2005. At its most recent sale held in Monaco, every Birkin dream-buy was available—from Nile crocodile to Mississippi alligator, with prices from US$10,000 to US$60,000.
So who is buying? “People who can afford it,” laughs Pigot-Kessler, a man who has sourced charity auction bags from Jane Birkin herself as well as a Kelly from the daughter of Grace, Princess Stéphanie. “Buyers may want to improve a collection, source a rare bag or they simply want to make an impact in the same way that owning a Picasso makes an impact,” he says. “Buyers are aware that nothing compares to a Hermès Birkin in terms of quality, material, colour. It is the best on Earth, the pinnacle of the art. People are prepared to pay for that.”
Blanckaert says Hermès auctions unite the world’s buyers from Australia and Asia to Europe and the US. “Buyers think ‘I am very rich, but I’m not a fashion victim’. They don’t wear a Balenciaga bag or the latest Yves Saint Laurent. They wear a Birkin. The wealthiest buyers are ready to spend an unlimited amount for a bag. Auctions result in fierce competitions to have the most beautiful bag, the one that will differentiate you from others and that you can’t buy off the shelf.”
By way of example, Artcurial recently sold a tri-coloured—red, orange and shocking pink—crocodile Birkin with an estimate of €40,000 (US$44,220) for €63,754 (US$70,480). That said, for such an affluent clientele, carrying a US$150,000 bag is just another day with another outfit. Kate Middleton is a fan and Victoria Beckham allegedly has a US$2 million collection of more than 100 Birkins. Kim Kardashian proudly Instagrammed her Hermès “customised” with paint by her one-year-old daughter North, and Kate Moss allegedly used one as a nappy bag. “The Birkin is so iconic that it helps the celebrity rather than the celebrity helps the bag,” says Blanckaert.
For lesser mortals, Heritage Auctions offers plenty of online choices. At the time of writing, a pristine gold Togo leather Birkin with gold hardware was available for US$21,250; a cobalt ostrich Birkin for US$35,000; a shiny black Porosus crocodile Birkin for US$81,500; and a matt white Himalayan Nilo crocodile Birkin with palladium hardware for US$107,500.
“The most important thing to watch out for is condition,” says Brownawell. “A bag that is brand new, almost straight from the store will hold its value best. If it is used even once, the value can drop by 20 per cent or more. Watch out for darkening to the handles, scuffing to corners and hardware scratching. Handles are going to be the most difficult to do anything about. If you have a light bag, the oils from your hands will darken the colour.”
Buyers in Paris appreciate items with history, soul and a natural patina of use, says Blanckaert, but in Monaco, women demand unique bags in mint condition. “Their tastes reflect their lifestyles,” she says. “They will never be carried around on public transport. These women only take chauffeur-driven cars. They will not tolerate a single scratch mark on a bag they buy, even in the secondary market.”
To each her own, indeed. But one thing’s for sure: whether pre-loved or brand new, a Hermès Birkin is a smart and stylish investment for the ages.
Birth of the Birkin
So this is how actress Jane Birkin inspired a fashion legend. “I’d been upgraded on a flight to London [in 1981] and was sitting next to a man… and when everything fell out of whatever bag I had, the man next to me said, ‘You should have one with pockets.’ I said, ‘The day Hermès makes one with pockets, I will have that’. He said, ‘I am Hermès and I will put pockets in for you’.” The passenger was Jean-Louis Dumas, CEO of Hermès, and after sketching out a design on a sick bag, fashion history was made.