Bernard Arnault is firmly in the driver’s seat of the luxury goods industry thanks to LVMH Moet Hennessy Louis Vuitton SE’s sponsorship of the F1 car race. The company’s dominance of the Paris Olympics and Paralympics was a warm-up for realizing the sporting ambitions of LVMH’s CEO and founder. The F1 partnership is the main event.
The 10-year deal, which could be worth nearly $1 billion, underscores that LVMH, with a market capitalization of about $370 billion, lives in a different stratosphere than its competitors. LVMH’s watch brand TAG Heuer will replace Rolex as the sport’s official timekeeper, Louis Vuitton will create the trophy case and the winning drivers will spray each other with bottles of Moët & Chandon.
Such agreements will keep LVMH’s brands at the forefront of consumer consciousness and in pole position to withstand the bursting of the glittering bubble. This tie-in will bring these names to the attention of die-hard fans and casual viewers alike. As auto racing is one of the most global sports, LVMH will be widely introduced to homes in the United States, Asia and the Middle East.
While events such as the Olympics and the Super Bowl draw large crowds, but are held infrequently, Grand Prix races draw large crowds every few weeks and are constantly advertised. F1’s popularity has exploded since it was acquired by Liberty Media Corporation in 2017, especially in the United States, thanks to an expansion of race venues and the Netflix series Drive to Survive. This has allowed them to attract a more social media savvy, younger and more diverse audience. In recent years, streetwear has embraced European luxury. While the market is cooling down, there is a possibility that sports can enter the market.
With what I have called the Kim Kardashianization of sports, sponsors are increasingly drawn to individuals rather than teams. Famous drivers such as Lewis Hamilton, Max Verstappen and Lando Norris can showcase their brand.
Like the Olympics, the deal underscores LVMH’s position as a phenomenon that goes beyond fashion, not just a seller of products. In particular, Louis Vuitton, which Arnault describes as a “cultural brand” and whose menswear is designed by musician Pharrell Williams, sits at the intersection of fashion, entertainment and sports.
LVMH’s hospitality arm, which includes the Cheval Blanc hotel chain, is not part of the remit, but experience associated with TAG Heuer, Louis Vuitton and Moët Hennessy could be incorporated when the sponsorship launches in January. There is a gender. “LVMH is in a league of its own,” Mario Ortelli, CEO of luxury advisory firm Ortelli & Company, told me. “This has created a platform that will give us an even greater competitive advantage.”
Popular watch brand TAG Heuer is no stranger to auto racing. In 1969, Heuer became the first non-automotive logo to appear on a Formula 1 car, through sponsorship of Swiss driver Jo Siffert. Two years later, it became a sponsor of the Ferrari F1 team. Perhaps the most famous association occurred in the 1980s, when Heuer, then under the ownership of Technique d’Avant Garde, introduced the brightly colored and wildly popular F1 watch. Earlier this year, under the management of LVMH, it partnered with streetwear brand Kith to release a new limited edition version of the watch.
So-called hard luxury, such as watches and jewelry, is one of the few areas where LVMH has room to expand. Three of Arnault’s sons are Alexandre, Tiffany’s executive vice president of products and communications; Frédéric is the CEO of LVMH Watches and previously ran TAG Heuer. Jean, Louis Vuitton’s director of watches, is also involved in this field of business, indicating that this field will become more important in the future.
Mr Arnault’s acquisition of a small personal stake in C Financière Richemont SE has fueled speculation over whether he has his sights set on becoming Cartier’s owner. However, Bernstein Research analyst Luca Solca said Swatch Group AG’s brands such as Omega, Blancpain and Longines could also be interested. Swatch CEO Nick Hayek recently said taking the company private is “a good thing.” Both companies declined to comment.
The F1 deal raises the profile of LVMH’s existing stable at a critical time. China’s desire for luxury goods is worsening, while American consumers are experiencing indigestion from overindulging in luxury goods from 2020 to 2023. Significant price hikes for many brands are also not helping demand. For example, analysts at HSBC Holdings Plc expect LVMH’s key fashion and leather goods division to see no sales growth, excluding currency factors, in the three months to the end of September.
LVMH is also making the transition closer to home. Last week, the company sold the Off-White brand, founded by the late Virgil Abloh, to licensing company Blue Star Alliance LLC for an undisclosed amount. A few days later, it was announced that Hedi Slimane would be leaving the successful Celine house and would be replaced by Michael Ryder, former creative director of Polo Ralph Lauren.
These external and internal challenges are a strong incentive for Arnault to deploy LVMH’s financial power to ensure it remains on top of the podium in luxury racing.
Written by Andrea Felsted
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LVMH and F1 announce 10-year partnership
The partnership will involve several LVMH brands, including Louis Vuitton, Moët Hennessy and TAG Heuer.
Disclosure: LVMH is part of a group of investors that collectively hold minority interests in fashion businesses. All investors have signed a shareholder document guaranteeing BoF’s complete editorial independence.
