From Moët & Chandon to LVMH

Bernard Arnault has been running the group ‘only’ since 1989 – but since then he has also been the majority shareholder. We will reveal how this came about later. But before we take a closer look at LVMH's business areas and its rapid development into a defining provider of luxury products, it is worth travelling a few years further back in time. Why did the luxury brands actually join forces? To find out, let's jump back to 1963.

At that time, Moët was still called Moët & Chandon – and was one of the major champagne market leaders. But there was also a lot of competition for the world's finest sparkling wine in the early 1960s. To maintain its own position, Moët & Chandon bought one of its two major competitors in 1963: Ruinart. At the time, the company was struggling economically, so the acquisition went quickly and smoothly.

A similar thing happened again in 1971, when Moët & Chandon bought the Maison Mercier. And then there was the Dom Pérignon brand, under which an independent champagne had been produced since 1936. The champagne house was mainly active on the French wine market – and it was precisely this market that Moët & Chandon wanted to expand at the time. At the same time, however, the company did not want to neglect its international character. And so the champagne makers relied on the expertise of the cognac producer Hennessy, with which they also merged in 1971. From then on, Alain Chevalier was managing director.

From Louis Vuitton to LVMH

In general, 1971 seems to have been something of a decisive year of preparation for the later LVMH group. In 1971, Louis Vuitton's great-grandson Patrick-Louis Vuitton took over the business. To this day, he still heads the department for special orders for special customers. In 1977, Vuitton's brother-in-law Henry Racamier, who was more business-minded, took over the management of the company. And Racamier had a vision. He wanted to expand the Louis Vuitton group and create a true luxury brand with several lines of business.

So under his aegis, the company first entered the Asian market, opened further production facilities and in 1983 became involved in sports sponsorship for the first time. Racamier supported the America's Cup sailing regatta, for example, by sponsoring the entire preliminary round selection, which was then also called the Louis Vuitton Cup. In 1984, Racamier also took Louis Vuitton public on the Paris stock exchange. He then used the IPO proceeds to buy the perfume maker Givenchy and a share in the cosmetics brand Guerlain. He also incorporated the Veuve Clicquot champagne house into Louis Vuitton.

Which brings us to the actual fateful year of 1987. At the time, both Alain Chevalier (Moët & Chandon) and Henry Racamier (Louis Vuitton) feared that hostile takeovers could occur. To protect themselves from this, the two luxury goods companies merged in 1987. Chevalier became president of the new company, with Racamier as his deputy. It was the birth of LVMH Moët Hennessy – Louis Vuitton SE. But instead of being strong together, the first clouds quickly appeared on the horizon.

LVMH: Bernard Arnault takes over

After only a year, differences of opinion arose about the company's strategic direction. Racamier felt dominated and therefore turned to Bernard Arnault, who had owned Christian Dior since 1985 (although Dior's perfume business had been taken over by Moët & Chandon in 1968). Arnault was to buy shares in LVMH, thereby strengthening Racamier's position. Alain Chevalier, on the other hand, approached the British beer and spirits maker Guinness in 1988, which received a 12 per cent stake in Moët Hennessy in exchange for 12 per cent of the shares in Guinness.

However, major disagreements soon arose: with the help of the investment bank Lazard Frères and Guinness, Arnault took over 45 per cent of LVMH. A legal battle with Racamier – Alain Chevalier had since left – ensued, from which Arnault emerged victorious. This allowed Arnault to become president of the group in 1989, against the will of the Vuitton and Hennessy family members. Since all this happened very soon after LVMH was founded, it is fair to say that the group is family-run. After all, Bernard Arnault is still at the helm of the global group as Chairman and CEO - and is one of the richest men in the world.

LVMH: Like a phoenix from the ashes

Of course, Arnault had learned from the mistakes of Chevalier and Racamier, who incidentally finally took his leave from LVMH in 1990. To avoid the risk of a hostile takeover, LVMH was supposed to grow as quickly as possible and position itself centrally in many different luxury segments to strengthen the brand as much as possible. There was just one small problem. In the 1980s, the Louis Vuitton brand logo was so present in the market that it quickly lost value in the leather goods sector. In other words, the world was saturated with Louis Vuitton.

Arnault soon found the solution: he put the other brands more in the foreground. He also realigned LVMH with the concept of sustainability after the 1992 Earth Summit in Rio de Janeiro. This was not only good for the environment, but also for the reputation of the group, which was the first company in the world to make sustainability a central theme, making it a true role model. Once the future course had been set, Arnault went on a gigantic shopping spree with LVMH.

The group grows and prospers

In 1993, LVMH not only bought the perfume brand Kenzo from its founder Kenzo Takada, but also the renowned fashion and shoe manufacturer Berluti. Just one year later, LVMH also acquired the remaining shares in the cosmetics and perfume company Guerlain. In 1996, the two leather goods manufacturers Loewe and Celine followed. We could actually go on like this forever. Because in fact, not a single year passed in the 1990s without a traditional company slipping under the LVMH umbrella. From watches, jewellery, cosmetics and fashion, fashion and more fashion, everything was there. Yes, LVMH even invested in a duty-free chain.

As nice as all this luxury is, one question still remains. Where is the wine? After all, LVMH was already the owner of the two major champagne houses, Moët and Veuve Clicquot, the top dogs in the Champagne region. Not to forget that Dom Pérignon, Ruinart and Mercier also already belonged to LVMH due to the merger. It was therefore an obvious step to also develop further wine-related business areas.

Château d'Yquem and Krug are added

And that is precisely what Arnault did in 1996. Not in the Champagne region, however, but in Bordeaux, where he bought Château d'Yquem, which had become legendary thanks to its sweet wines, from the noble Saluces family. What was special about this purchase was that Count Lur Saluces remained the general director of the winery until his retirement in 2004. Even more important was the fact that Château d'Yquem remained independent. So there was no need to compromise on its own quality standards, for example, in order to be even more successful economically.

The same thing happened in 1999, when Maison Krug, a true champagne icon, became a member of the LVMH family. Here, too, the independence of production was maintained. Although the two brothers Henri and Remi Krug withdrew from day-to-day business in 2007, Olivier Krug has now been running the traditional house since 2009, making him the sixth generation of his family to do so.

And that is precisely LVMH's strength when it takes over a traditional company: it changes almost nothing. On the contrary, LVMH is still very keen to maintain the original standards – provided they are successful. As a rule, LVMH does not buy ailing companies, but almost exclusively companies that are doing well economically but may have problems with succession planning. Or they feel too much of a squeeze in the market, so they would rather belong to a strong group like LVMH.

LVMH: of cult brands and start-ups

Whereby LVMH not only buys historic wineries, but also likes to add contemporary high-flyers to its portfolio. The best example of this is the New Zealand star winery Cloudy Bay, which has been thrilling people all over the world with its Sauvignon Blanc since the 1980s. A real cult wine – which now belongs to LVMH.

And then LVMH also founded its own vineyards. The best example of this is the Ao Yun vineyard in China. The vision was to produce a red wine in China that could compete with the best wines in the world. For four years, LVMH employees searched for the ideal terroir until they finally found it in Yunnan province. And at the foot of the Himalayas, to be precise. Not far from the legendary city of Shangri-La. The first vintage came onto the market in 2013

An overview of wines and spirits

Ultimately, it is the mix of very renowned, very iconic and very sensational new projects that makes LVMH so successful in the wine and spirits sector. It would be beyond the scope of this article to list in detail the takeover or founding history of all 27 brands that now belong to LVMH. Therefore, a brief overview in alphabetical order follows:

• Ao Yun (China)
• Ardbeg (Scotland)
• Belvedere Vodka (Poland)
• Numanthia (Spain)
• Chandon (Argentina, California, Brazil, Australia, China and India)
• Cheval des Andes (Argentina)
• Château Cheval Blanc (Saint-Émilion)
• Château Galoupet (Provence)
• Château d'Yquem (Sauternes)
• Clos 19 (Paris)
• Cloudy Bay (New Zealand)
• Colgin Cellars (California)
• Dom Pérignon (Champagne)
• Domaine des Lambrays (Côte de Nuits)
• Eminente (Paris)
• Glenmorangie (Scotland)
• Hennessy (Cognac)
• Joseph Phelps (California)
• Krug (Champagne)
• Mercier (Champagne)
• Moët & Chandon
• Newton Vineyard (California)
• Ruinart (Champagne)
• Terrazas de los Andes (Argentina)
• Veuve Clicquot (Champagne)
• Volcan de mi Tierra (Mexico)
• Woodinville (Washington State)

LVMH and the fourth richest man in the world

It's an impressively long list – with more than a few oenophile legends. Of course, Bernard Arnault does not personally take care of the operational and strategic business in the wine and spirits sector. Since 2017, the Luxembourg native Philippe Schaus has been responsible for this. He and his team support the brands and are always on the lookout for the next vinophile hit – whether it's a takeover or a new venture. This is not possible without top personnel. In France, for example, ecology legend Pierre Lurton takes care of the Châteaux d'Yquem and Cheval Blanc, which has earned him the nickname ‘Ducasse of Wine’.

It is therefore not surprising that in 2023, Philippe Schaus was able to generate an annual turnover of 6,602 billion euros for LVMH. And that was exclusively with premium wines and genuine wine icons. No other company in the world has achieved this on this scale. It is therefore only logical that Bernard Arnault has been one of the richest men in the world for many years. With an estimated fortune of around 170 billion dollars, he is currently the fourth richest man. However, Arnault also does a lot of good with his money. He invests enormous sums in environmental protection and sustainability at LVMH, and supports social and art projects. And after the catastrophic fire at Notre Dame in Paris in 2019, he donated 200 million euros for the reconstruction of the cathedral....