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The great predator of luxury: this is how Bernard Arnault built the LVMH empire, valued at 410,000 million euros


Highlights: Bernard Arnault is chairman of the LVMH group, owner of brands such as Louis Vuitton, Dior, Tiffany & Co., Moët & Chandon. His fortune, doped by the increase in revenues, profits and the value of shares, has exceeded this spring in some days the 200,000 million euros, greater than the annual budget of the European Union. At 74, his biggest challenge is deciding who of his five children leaves a conglomerate with brands like Dior and Bulgari.

The French businessman was always first in the class. The rise in the stock market of the company places its fortune at 187,000 million euros. At 74, his biggest challenge is deciding who of his five children leaves a conglomerate with brands such as Dior, Tiffany, Don Pérignon or Bulgari

Bernard Arnault always wanted to win. As a child he was the first in class. Later, the one who passed the most demanding exams to access the most demanding studies. They say that he got to play the piano very well, but, since he knew that he was not going to be the best with the piano, he left it, and now it is only a hobby. He keeps a grand piano in a room next to his office at 22 Avenue de Montaigne, in Paris. Sometimes he comes closer, plays a sonata. Either the best or nothing. The owner of the best brands: the emperor of luxury. The art collector, the philanthropist. And the person who disputes with Elon Musk the scepter of the richest in the world.

The ranking fluctuates: this week, after holding it for much of the year, he has lost the throne to the owner of Tesla and Twitter, according to the Bloomberg Millionaires Index. But that the master of LVMH has become the first fortune on the planet has a logic.

"He was always first in everything," says Nadège Forestier, a journalist from Le Figaro who treated him assiduously during the years of his rise and in 1990 published, together with Nazanine Ravaï, what is probably the most complete biography of his early years, Bernard Arnault ou le Goût du pouvoir (Bernard Arnault or the taste of power). "I think he finds it normal to be the richest in the world, since he was always above the others."

Arnault (Roubaix, 74), chairman of the LVMH group, is an anomaly in global capitalism. A man of an artisanal and elitist industry, that of luxury products, in the era of Silicon Valley billionaires and technological populism. A Frenchman in a club traditionally monopolized by Americans, perhaps Chinese in the future, and at the height, or above, Musk or Jeff Bezos. It surpassed them at the end of 2022 and has since consolidated its position. His fortune, doped by the increase in revenues, profits and the value of shares, has exceeded this spring in some days the 200,000 million euros, greater than the annual budget of the European Union. According to Bloomberg's most recent tally, on June 2, it now stands at about 187 billion euros. Arnault has more than 000% of the shares of LVMH, a company that in the last five years has revalued on the stock market by 40% and is worth 166,410 million euros.

"His talent consists of taking a brand that exists and giving it an incredible accelerator stroke," sums up essayist and consultant Alain Minc, who knows Arnault well. But it cannot rest on its laurels. In reality, it's not the competition that keeps you up at night. LVMH (owner of brands such as Louis Vuitton, Dior, Tiffany & Co., Moët & Chandon and a total of 75 maisons or houses in fashion, cosmetics, jewelry, alcoholic beverages) dominates an unstoppable sector: the number of millionaires increases, although the clientele is not limited to this segment.

Arnault does not lose sleep over being unpopular in his country either, although this winter, during the demonstrations against the pension reform, he was listed as one of the favorite recipients of the slogans of the protesters. Not as hated as President Emmanuel Macron, not by a long shot, but he did appear as a symbol of social inequalities and injustices. "France is doing badly for different reasons," laments left-wing MP François Ruffin, Arnault's nemesis in the public debate in France. "The republican motto is 'Liberty, equality, fraternity,' and I think that, for 40 years, France has been wounded in equality."

Facade of the main store of Louis Vuitton, on the Champs Elysées (Paris). Cyril Marcilhacy (Bloomberg)

Five children

If anything occupies Arnault these days, if something could twist everything, it is something else: succession. It is a particular and eternal story. A patriarch and five children between 48 and 24 years old, two from a first marriage with Anne Dewavrin (Delphine and Antoine) and three from the second with Hélène Mercier (Alexandre, Frédéric, Jean). They work in the business. Everyone, on paper, could happen to him. He has given himself until he is 80 years old to continue at the helm, although nothing prevents him from postponing retirement. He will take his time to decide.

"Bernard Arnault has worked hard to maintain the balance between the children and so that there are no battles between them," explains Le Monde journalist Raphaëlle Bacqué, co-author with Vanessa Schneider of Successions. L'argent, le sang et les larmes (Successions. Money, blood and tears). Everything is going well, apparently. But Bacqué, who interviewed the patriarch and his sons for his book and entered the sanctum sanctorum on the Avenue de Montaigne, said: "There are rivalries that are not expressed." It all starts in Roubaix, on the French-Belgian border and the industrial north, a galaxy far from the Avenue de Montaigne with its Fendi, Celine, Givenchy, Dior, Vuitton stores. This is the north of France, the old industrial lung of the country. From the seventies and eighties, this region suffered the gale of globalization and the closure of factories and mines. The workers' bastion of the left became one of the main pockets of votes of the far right. Son and grandson of construction entrepreneurs in Roubaix, Arnault belongs to a family of the provincial bourgeoisie. At the age of seven, his grandfather took him to visit the works. An obsession, even then: education. When his grandfather dies, he grabs the report card, in which the teachers congratulate him on the excellent work, and puts him inside the coffin. It is his tribute.

There is something very French about this man: what Bacqué calls "the religion of the diploma." If the National School of Administration, the ENA, trains senior officials, he opts for another path, that of engineering: the demanding School of Mines and Polytechnic. Decades later, she will try to get her children to follow the same curriculum. Not always successfully. "For him, the only thing that counts is the Polytechnic," Antoine, the eldest son, at the helm of the holding company that controls LVMH, told Bacqué and Schneider at Successions. "I understood right away that I wasn't cut out for this. I would say, 'You must not try to sculpt me in your image and likeness.'

The devotion to the Diploma and the Polytechnic explains why, in the pools on succession, the fourth son, Frédéric, 28, responsible for the watch brand TAG Heuer, is sometimes singled out. "Not only does everything work out for him, but he is modest and quite friendly," says Bacqué in a café in Montparnasse. "And it's polytechnic," he adds, "like Bernard Arnault." The eldest of the second marriage also stands out: Alexandre, 31 years old and an executive at Tiffany & Co., very exposed in social networks and media. Not forgetting the firstborn, Delphine, 48, head of Dior and married to French telecommunications entrepreneur Xavier Niel. And the youngest son, Jean, 24, who works in Louis Vuitton's watch division.

But let's go back to the young Bernard Arnault, who, fresh out of the Polytechnic, returns to the north and enters Ferret-Savinel, the family business. Soon Jean, his father, gives him control. On May 10, 1981, François Mitterrand won the presidential elections and a chill ran through the wealthiest layers of the country. For the first time since 1958, when in the middle of the Algerian war General De Gaulle founded the Fifth Republic, a socialist arrives at the Elysée. And allied with the communists! A minister of Valéry Giscard d'Estaing, the outgoing president, proclaimed a few days before the election that, if Mitterrand won, Russian tanks would parade down the Champs-Elysées.

Bernard Arnault, with two of his five children, Delphine and Antoine, at an event in Paris in 2021. YOAN VALAT (AFP/GETTY IMAGES)

Arnault packs his bags and settles with the family in New Rochelle, near New York. Invest in real estate operations in Florida and prepare the next moves. Biographers Forestier and Ravaï write that one day, shopping at Bloomingdale's New York department store, he looks for an evening gown and a suit. Choose Dior. "And then," the biographers recount, "he thinks, 'There is no more beautiful name. In America, the president of Dior is better known than the president of the French Republic."

It's time to go back. In 1983 Mitterrand has rectified his economic policies, the times seem more propitious to undertake in France. Boussac is bought for a symbolic franc, a textile empire on the verge of bankruptcy. Over the next six years, Arnault will eliminate 8,000 jobs. What interests him is Boussac's jewel: Christian Dior. It will be the first stone of the empire. "Are there serious risks?" the father asked the son at the time of the purchase, according to the Les Echos newspaper, also owned by LVMH, when Jean Arnault died in 2010. "Yes," the son replied. The father replied, "You don't do good business without taking risks. Let's get to it!" Five years later, just turned 40, LVMH took over Louis Vuitton Moët Hennessy, which was already the world's leading luxury group.

"Until then, luxury was the heritage of very prestigious small maisons, without huge turnover," says Nadège Forestier, Arnault's biographer, in the living room of his apartment, near the Eiffel Tower. "He saw that there was a population in the whole world of people who could access this and who could be made to dream and, at the same time, that there was in the whole world a potential for wealth." Forestier adds, "I remember we were finishing the book and we asked him, 'What will you do in 20 or 30 years? We were convinced that he would dedicate himself to banking, to finance. We never thought he would continue to lead a group dedicated solely to luxury."

Raphaëlle Bacqué observes: "He came back from the United States with the idea that, being European and being French, what for the rest of the world is France is gastronomy and fashion. And this is exactly what LVMH has built on." He adds: "What's interesting is the idea of a luxury that is not only aimed at the rich, but also at the popular categories that buy their lipsticks or a gossip with the Dior logo. He understood that not only do the rich buy this, but the middle classes want to partake of luxury as well."

That France, France permanently distressed by its decline, the egalitarian France that is one of the most redistributive countries on the planet, produces the richest man on the planet is one of the paradoxes of the Arnault phenomenon. A mystery, because this is not the most innovative country, nor – if one pays attention to the political and intellectual discourse – the most attached to free trade and capitalism, nor does it have a powerful industry.

Alain Minc explains the paradox with a metaphor. "Look at a map of the world and imagine, for a moment, that California has been devoured by an earthquake," he says. "Where in the world are the biggest capitalists? Little France! That is, if one dispenses with the people of technology, France is the only country that has produced big capitalists in recent years. Arnault, the first, but not only him: also Pinault, Bolloré, Niel... And, in addition, the families that have inherited companies and that have made them grow tremendously: Dassault, L'Oréal, Hermès."

Window of a Dior store in Paris. Benjamin Girette (Bloomberg)

And why this success? "These people learned to manage at a time when managing was very difficult, since we were a 'socializing' country," Minc replies. "When you've learned to run the 100 meters with a sandbag on your back, the day you get the sandbag removed you run very well." It is another way of saying that it was not a country for capitalists, but something changed about 15 years ago, with the arrival of Nicolas Sarkozy at the Elysée, and then François Hollande and Emmanuel Macron. He was already strong before; Then they multiplied their force de frappe, their punch.

"He has always had good relations with presidents since Jacques Chirac and has dressed all the first ladies since Bernadette Chirac," explains Bacqué. "It lobbies on taxation: inheritance rights, wealth tax."

The relationship of many French people with their rich is ambivalent, as it is with luxury: a mixture of hatred and admiration, rejection and pride. On April 13, a few dozen demonstrators striking against pension reform entered LVMH's headquarters with flares.

The image went around the world: those below conquering the strength of those above. The symbol is not new. Deputy Ruffin dedicated to Arnault in 2015 a documentary in the style of Michael Moore, Merci, patron! (Thank you, boss!), which began with images of abandoned factories of the Boussac textile and recalled the controversy in 2012 when Arnault asked for Belgian nationality and the newspaper Libération headlined on the front page: 'Get out, rich asshole!'. Years later, the deputy denounced that he was subject to surveillance by the former head of the internal secret services, the murky Bernard Squarcini, who at the time worked as a consultant for LVMH.

Says Ruffin: "I have no feeling of revenge towards Bernard Arnault as an individual. I simply believe that this social class must be put on the ground and, if it does not do so on its own initiative, forced to put them: in the fiscal, social, ecological field. "

Arnault, who eventually renounced Belgian nationality, usually responds to criticism by recalling that LVMH has about 40,000 workers in France, of the 175,000 worldwide, and more than 100 production centers in the country. And he insists that LVMH is the first corporate tax payer in France. Regarding Ruffin, he told the Senate in January 2022: "Mr. Ruffin is someone very bright who is far-left and for whom LVMH has always been a scarecrow."

A great shark

The appearance before the Senate, during a commission of inquiry into media concentration, is one of the few recent public statements by this man "shy, but self-assured, extremely well educated but very cold, glacial," according to Nadège Forestier. "Physically he is particular," describes journalist Raphaëlle Bacqué, who interviewed him for her book. "It's very tall, long, it looks like it's sliding on the ground... It looks like a big shark."

Once a month, Bernard Arnault has lunch with his children at 22 Avenue de Montaigne. They spend the holidays together. It has placed them in strategic positions. They talk almost every day. "Everything takes it into account," stresses Bacqué. "The ability to run the company, but also the psychological balance, the ability to work. The character."

"He tests them, he puts them in competition, but nothing says that the day he chooses one, the others will accept him," says Minc. "Since all five are in the company and since everyone is good, the decision is not clear. All five could succeed him. So it's going to be complicated. In addition, the five come from two different marriages, which complicates it as well. So the only problem is the choice of successor. But he is in top form, he plays tennis every day, he thinks he will continue for many years."

The paradox of high-end items

Bernard Arnault intuited, when in the eighties he acquired Dior and then LVMH, that the luxury sector was not a minority thing and that it could represent a fabulous business. Happened. There is a boom in the sector, linked to its popularization, but also to an increase in potential customers, the rich. Every day there are more and in more countries (the Chinese market is decisive, and the reopening after the pandemic has returned it to the stage), and there is no pandemic or crisis that slows it down.
Claudia D'Arpizio and Federica Levato, from the consulting firm Bain & Company, analyze in reference to the recovery of the sector after the pandemic: "The elements that drove luxury spending in 2022, as in the current year, were: the desire of consumers to live lost experiences (that is, the culture of 'you only live once'), the savings accumulated during COVID-19 and the appetite for luxury purchases for investment purposes and resale opportunities. Despite potential bumps in the road, luxury is in an excellent position in the medium term."

In 2021 there were 62.5 million millionaires in the world, according to a study by Credit Suisse, 52% more than the previous year. In 2026 it is expected to be 87 million. And the number of the super-rich, with a fortune of more than 50 million dollars, was 2021,264 in 200 and is expected to reach 385,000 in 2026. D'Arpizio and Levato estimate that, in 2030, the market value could reach between 540,000 and 580,000 million euros, 60% more than the value of 2022, and the consumer base will reach 500 million customers. Exclusive can be massive: this is another key to Arnault's success.

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Source: elparis

All business articles on 2023-06-04

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