LVMH - Building Star Brands


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Case Details:

Case Code : MKTA016
Case Length : 15 Pages
Period : 1987-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Moet Hennessy Louis Vuitton (LVMH)
Industry : Luxury Goods
Countries : Global

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Zenith
In 2001 Arnault brought over Thierry Nataf, who once managed Veuve Clicquot, one of LVMH's most successful champagne brands, to Zenith watches...

Pucci
Pucci, the Italian clothing line had not been doing well until Arnault asked Christian Lacroix to redesign it in early 2002...

Ruinarat
Ruinart was an exclusive champagne priced just below Dom Perignon. Here again, LVMH was constructing a history-rich story to sell...

Operations

Even though LVMH was best known for its brands, the company believed in a high level of discipline for its operations. The company realized that in the case of luxury brands, the innovation supporting the creative process and the advertising were very expensive. High profitability could only come with discipline in the manufacturing process. This discipline included a tremendous emphasis on quality...

Future Outlook

Vuitton generated 25% of LVMH's $13.5 billion in revenues and a significant 60% of its $2.47 billion in operating profits. This seemed to be a high level of dependence on one brand for a company that owned more than 50 others.

"Our strategy is to bring this star status [of Vuitton] to other brands," admitted Arnault.
"We have to build for the future."


LVMH also realized it needed to reduce its dependence on Japanese customers, who accounted for an estimated 55% of its revenues...

Exhibits

Exhibit I: Net Sales by Business Group
Exhibit II: Income from Operations by Business Group

 

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