he story of LVMH and watchmaking dates back some twenty years. After conquering fashion, spirits of all kinds, leather goods and many other segments, the group launched into watches with a bang at the end of the 1990s, acquiring TAG Heuer, Zenith and Ebel in 1999. Ebel was quickly sold to the Movado group. Hublot joined the group’s portfolio later, in 2008, after being bought from Carlo Crocco and Jean-Claude Biver.
It was with these three brands – TAG Heuer, Hublot and Zenith – that LVMH would attempt to compete in a hotly contested arena. The results were mixed. While TAG Heuer (bought by LVMH from the TAG Group, Techniques d’avant-garde) had been blazing ahead under Jean-Christophe Babin since the early 2000s, Zenith oscillated between the flamboyance of the Nataf years (Thierry Nataf is credited with having restored visibility to the brand) and the lightning passage of Jean-Frédéric Dufour, now head of Rolex, before being entrusted to the safe hands of Aldo Magada. Then came Julien Tornare, who gave the brand coherence after years without a clear direction, vision or positioning.
Hublot, masterfully shepherded by Jean-Claude Biver, brought strength to the group with its unique format. But while the ’mono-product’ formula was incredibly successful in its heyday, it appears to be struggling today. Diversification will be key.
The group’s portfolio also includes watches from Louis Vuitton, Dior and Fred – brands for whom the watch segment represents a minor proportion of their overall sales. Nevertheless, it’s worth keeping a close eye on what’s happening at Louis Vuitton’s La Fabrique du Temps.
- Frédéric Arnault
Since Business Montres broke the story in the summer, these movements within LVMH’s Watches & Jewelry division have continued to fuel rumours. The clues were apparently there for those who knew how to read them. Frédéric Arnault was photographed alongside Stéphane Bianchi, boss of the division, and Jean-Christophe Babin, CEO of Bulgari, at the Italian brand’s annual Haute Joaillerie event in Venice. Some thought this looked suspiciously like an induction photograph.
But – it wasn’t. The word on the street was that Frédéric Arnault wanted to move on, but the question was where and how. After three years at the helm of TAG Heuer, in addition to two years devoted to smartwatches at the same brand, we now have our answer. Although TAG Heuer has shifted its focus in recent years to reissuing its great classics, the brand deserves credit for having entered the smartwatch arena, which many watchmakers dismissed.
A family affair
At the end of the day, this was a natural development. The fourth of Bernard Arnault’s five children has had plenty of opportunity to hone his skills at TAG Heuer, and it was time for him to broaden his reach. It remains to be seen what this new position will entail.
It is, nevertheless, a family affair. Bernard Arnault ensures he retains control of the group by placing his children at the head of flagship companies or in other key positions. In addition to Frédéric Arnault, Alexandre Arnault is director of products and communications at Tiffany & Co., Delphine Arnault is head of Christian Dior Couture and Antoine Arnault is CEO of the finance company that controls 41% of the shares in the LVMH group.
Then there’s Jean Arnault, the youngest (25), who runs Louis Vuitton Watches. He recently announced a strategic shift in direction for LV watches, a move that has attracted a great deal of attention and is highly relevant. This is the younger son who brought Daniel Roth and Gerald Genta back to La Fabrique du Temps, with some very promising first launches – not forgetting the recent collaborations launched with a number of independent watchmakers and the prize that will be dedicated to them this year.
There’s little doubt that Jean Arnault loves his watches, and he has clearly understood the current dynamics of the market. He’s definitely one to watch. For the record, it was Bulgari that first took on Daniel Roth and Gerald Genta back in 2010. However, in the absence of strong activation, it will now no longer be able to capitalise on their potential, even though all the indicators point to a promising outcome for the relaunch of high value-added niche brands that are fondly remembered by collectors.
Bulgari in attack mode
The apparent retention of Jean-Christophe Babin at the helm of Bulgari is not in itself surprising. Bulgari is a multi-product company, but jewellery accounts for the bulk of its sales (over €2 billion). Jean-Christophe Babin has been pushing this division for years, and rightly so.
For players in the luxury goods market, jewellery is the key area for growth in the years ahead, with great potential for capturing market share. The watch sector, meanwhile, is more crowded. A profusion of brands, from established behemoths to the newest micro-brands emerging almost weekly, are battling it out to secure a coveted place on the wrists of watch lovers.
In terms of brands, jewellery remains largely uncharted territory, with just a handful of brands dominating the market. These are, in no particular order: Cartier (Richemont), Tiffany & Co, Van Cleef & Arpels (Richemont), Bulgari and Harry Winston (Swatch Group), alongside Pomellato (Kering), Chopard, Chaumet (LVMH), Boucheron (Kering), Graff and a few others. The remainder of the market is shared between a multitude of anonymous producers and brands with no international reach.
Jewellery is the playground for the major luxury groups for one obvious reason: sales in this category far exceed those of watches. Jean-Christophe Babin’s roadmap is to push Bulgari jewellery, in perfect synchronisation with Tiffany & Co., to compete with Richemont.
According to FortuneBusinessInside, the global jewellery market was valued at $216 billion in 2022, with growth projected to reach $308 billion by 2030. In comparison, watchmaking was expected to reach $75.75 billion last year, according to Statista.
What are the prospects for the new division?
Back to watches. Julien Tornare, the current boss of Zenith, will be taking over at TAG Heuer. Zenith, mischievously described as the brand that “everyone loves but no one buys”, experienced a turnaround under Julien Tornare, who was able to put the company’s past challenges behind it. With a revised product offering and a comprehensive advertising campaign targeting a younger clientele, he worked tirelessly to pull Zenith out of its directionless past, boosting sales and transforming it into a more desirable brand.
Still, one cannot help feeling that Zenith could or should go even further. Benoît de Clerck, an energetic man who conducts business at a brisk pace, will put his own stamp on Zenith, and he takes charge of the brand’s next moves in a business context that might not be entirely positive.
- Julien Tornare
Over at TAG Heuer, the brand that Julien Tornare will be taking over, many observers believe the brand could deliver even better results. It will be up to him to demonstrate that he can lead the brand to the one billion franc mark, in the face of formidable competitors such as Breitling, Tudor and Omega in particular, whose market positioning is clear.
Basically, then, there’s nothing too surprising about the outcome of this particular game of musical chairs. But LVMH has yet to establish itself as a major force in watchmaking, in line with the ambitions of Richemont, Swatch Group and Rolex. The creation of this new watch division is an early salvo in a battle that has only just begun.