Tiffany & Co, Aimé Leon Dore, Barton Perreira, Birkenstock, Polène… are only a few of the numerous brands in which the French luxury conglomerate LVMH recently acquired a stake. What explains LVMH CEO Bernard Arnault’s expansion strategy? How do brands, their image and strategy evolve after being acquired by such a giant of the luxury sector?
LBSS digs into it.
Since 1987, LVMH has acquired 75 brands cross-divisionally. Arnault is a dealmaker. As a proof of this, take the birth of LVMH, marked by the merger between Louis Vuitton and the French wines and spirits brand Moët Hennessy!
In recent decades, the luxury sector has witnessed the significant growth of a new, “mass luxury” market, a change driven by a variety of transforming influences, including the merging of top-tier, middle-tier and entry-level luxury brands. Mergers and acquisitions (M&A) have transformed the sector, and LVMH greatly contributed to this movement. In fact, since its creation, the French conglomerate completed 41 diversifying acquisitions, with an average acquisition amount of $5.5B, and a peak of M&A activity between 2022 and 2023, with 6 and 7 acquisitions respectively.
Why is M&A such a pinnacle of LVMH’s growth strategy? Why do certain brands join LVMH’s portfolio, and others don’t?
Here is a hint: Givenchy 1988, Kenzo 1993 and Guerlain 1994. These are the names of the first three brands acquired by the French conglomerate, with the corresponding dates of the transaction. All three have a common denominator: they already were prestigious brands globally recognized for specific strengths: haute couture and ready-to-wear fashion for Givenchy, multicultural designs for Kenzo and luxury cosmetics for Guerlain. By acquiring them, LVMH strengthened its image as a diverse luxury conglomerate, and opened the ball to a subsequent series of acquisitions.
The will to solidify LVMH’s positioning in specific markets also drives the luxury group’s acquisition strategy. When Arnault closed a $15.8B deal for the acquisition of Tiffany & Co in 2021, he confirmed the group’s reputation as a hard-changing negotiator, but most of all enabled LVMH to cornerstone its penetration into the global hard luxury market – then dominated by their rival Richemont. Similarly, the 1990s wave of acquisitions (leather goods and ready-to-wear brand Céline and the duty-free retail chain DFS in 1966, American designer Marc Jacobs in 1997 and Tag Heuer in 1999 for $739M) gave LVMH a stronger position in a wide range of specific markets.
Vertical integration, which gives LVMH more control over the production cycle, also encourages M&A operations. In acquiring the vertically integrated Tiffany & Co, LVMH gave brands like Bulgari the side benefit of using the jewelry brand’s production plants and resources for their own. The creation of synergies and the sharing of resources are indeed two pinnacles of Arnault’s acquisition philosophy.
Play with sector dynamics, attract attention: two other drivers of an effective expansion strategy. LVMH’s purchase of a 10% stake in (Moncler’s) Remo Ruffini’s investment vehicle “Double R” reinforced LVMH’s reputation as a supporting force of vision and leadership in the luxury sector. As a notable side benefit, Arnault gets to appoint two board members of his choice within RR and one on the board of Moncler. This is what we call a power move.
Let’s recap. LVMH’s expansion strategy is driven by several forces. To the question “why acquire?”, Arnault responds: to build the conglomerate’s image, to guarantee it a stronger position in specific markets, to diversify product range, to vertically integrate, and to make a fashion sector powerhouse out of LVMH, reinforcing its influence in the dynamics of the sector (including within other brands’ boards…).
But this gives rise to another important question: acquire, yes, but acquire who?
First of all, brands that are already trusted by a specific array of consumers. This usually implies acquiring luxury brands that are popular in specific countries, or within circles defined by specific fashion trends. The acquisition of an 80% stake in the German high-end travel equipment manufacturer Rimowa for $640M in 2016, the purchase of a similar stake in Italy’s beloved cashmere-obsessed Loro Piana in 2013 as well as the $80M worth takeover of Barton Perreira, the luxury eyewear icon based in LA in 2023, all add brands that already secured the loyalty of customers to LVMH’s portfolio, setting a promise for further positive growth under LVMH’s wing.
Brands that join LVMH’s impressive portfolio also have something else in common: they are digitally innovative. 2015 saw LVMH invest in the e-commerce and fashion search platform Lyst as part of a $60M funding round in order to enhance its digital presence and gain deeper insights into online shopping behaviors. Lyst aggregates data on millions of shoppers’ buying habits, allowing LVMH to refine its digital marketing strategies, while also affirming its presence within the online retail sector. Yes, it always comes back to market positioning, and domination.
The subsequent acquisition of 100% of Belmond Ltd’s shares for $3.2B in 2019 gave LVMH control marked a significant expansion beyond physical goods into the more-than-ever trending experiential sector.
At last, LVMH acquires firms that incarnate entrepreneurial success stories. This vision drives its careful choice of partners, as exemplified by its stakeholding in the private equity firm L Catterton. Formed in 2016, their partnership reflects LVMH’s tendency to merge with link-minded, innovative entities with a reputation to transform their asset brands into market leaders in all sectors, including fashion. L Catterton focuses on mid-market companies with a strong potential for scaling and growth: brands like Ganni, Birkenstock, APC, and Polène, were respectively acquired by the fund in 2017, 2021, 2023 and 2024, all of which characterized by timeless designs, high-quality craftsmanship and strong consumer connections even before L Catterton and LVMH partnered. Great match.
Part of the success of their never-ending expansion is due to the fact that joining LVMH’s portfolio is also a synonym for success at the individual brand level, with prospective growth in sales and market share acting as incentives for fashion brands joining in. This is first due to the access newly acquired brands get to LVMH’s opulent resources in terms of retailers, real estate developers, magazines, influencers… Comparing Tiffany & Co’s recent advertising campaigns and actual social media presence with their 2021 performance (pre-LVMH acquisition) gives a proof of this: the brand since then stopped suffering from a lag in modernising retail stores and marketing campaigns.
Joining the LVMH arena also makes individual brands globally relevant, as newcomers can enjoy the conglomerate’s access to multiple markets – notably the increasingly important Chinese market. This is particularly attractive for brands anchored in their local culture wishing to invest in international expansion. As an example, LVMH’s involvement in the Italian luxury sector is what we may call a “win-win situation”: the brands who joined the conglomerate during the New Millennium period (2000 to 2010) – Pucci, Fendi and Bulgari – strengthened the French shark’s positioning in the Italian market and boosted the three Maisons’ global exposure.
Preserving brand identity; synergies and shared resources; long-term vision of innovation and digital transformation: here are the pinnacles driving LVMH’s yet unequalled expansion strategy, who contributed to the conglomerate’s long-standing domination of the French and international luxury sectors for several decades now. Affaire à suivre.
