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LVMH targets a $30 billion watch market with reinvented high-end pieces

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LVMH launches Watch Week in Miami

Luxury giant LVMH is striving to gain market share in the global luxury watch sector, with a newly created watch division and a range of new, more expensive models.

Sales of luxury watches worldwide are estimated at around $30 billion this year, according to market research firm IMARC Group. They are expected to reach more than $37 billion by 2032, as global wealth increases and Gen Z and millennials become more interested in high-end mechanical watches.

LVMH’s jewelry and watches division achieved sales of $11.8 billion in 2023, an increase of 7% in organic growth. The luxury giant now has 10 watch brands, including TAG Heuer, Hublot and Zenith, as well as fashion and jewelry brands like Louis Vuitton, Bulgari and Dior which also make watches.

Last month, the company named Frédéric Arnault, the 29-year-old son of LVMH Chairman and CEO Bernard Arnault, as CEO of LVMH Montres, which includes the TAG Heuer, Hublot and Zenith brands.

Analysts estimate that sales of these three brands reached around $2 billion last year.

A Zenith luxury watch at Watch Week 2024 in Miami.

CNBC

Frédéric Arnault, who launched a range of highly popular new models at TAG Heuer, is expected to emphasize innovation, cutting-edge materials and creative designs within the wider group of brands. Analysts say LVMH could also continue to acquire attractive brands if they become available.

In interviews with CNBC during LVMH’s Watch Week in Miami, brand executives said 2024 was already looking stronger than 2023, when rising interest rates and recession fears tempered demand. Executives say they are particularly encouraged by the resilience of the American luxury consumer.

“It’s all about cycles, and the beauty of America is that the cycles are very short,” said Benoit de Clerck, CEO of Zenith. “We’re going through ups and downs and all that, but I can reassure you today that Zenith is definitely on the rise and has good traction in the US markets.”

Zenith luxury watches at Watch Week 2024 in Miami.

CNBC

Watch sales follow a similar trend to the broader luxury market, where wealthier consumers remain strongest. Executives say the wealthy are less affected by rising interest rates and economic uncertainty, so more brands are catering to “super-spenders” and VIP collectors who continue to spend on the highest quality and craftsmanship.

“Premium has really been one of the main drivers of our growth,” said Jean-Christophe Babin, CEO of Bulgari. “I think the wealthy are more eager than ever to invest in authentic, reputable and timeless brands.”

Babin said he sees a rise in high-end across Bulgari’s businesses, which now include hospitality, fashion and fragrance.

“We sold more high-end jewelry, more high-end watches, more high-end bags,” Babin said, showing off one of Bulgari’s coveted yellow gold Serpenti Secret watches, which retails for $350,000.

A Bulgari Serpenti Secret watch at Watch Week 2024 in Miami.

CNBC

LVMH is also targeting the fastest growing segment of luxury watches: women’s watches. While women’s watches only account for about a third of total sales, women’s interest in luxury mechanical watches has exploded due to greater visibility on social media and a growing number of models. designed for women. The growing global population of wealthy women – whether self-made or inherited – is also fueling sales growth.

“The trend is towards more and more feminine and unisex watches,” Babin said. “Women have increasing power, in terms of independence, autonomy and purchasing power. We think this will continue.”

Reinvention

In the highly competitive world of luxury watches, brands must constantly innovate materials, complications and designs to gain market share and retain collectors.

Carrera Plasma Diamant Avant-Garde Chronograph Tourbillon at Watch Week 2024 in Miami.

CNBC

TAG Heuer, which has its roots in motor racing, has had huge success with its Carrera Plasma, using synthetic diamonds. Its Avant-Garde Carrera Plasma Diamond Chronograph Tourbillon costs more than $500,000 and has a waiting list of more than two years.

TAG Heuer also revealed a teal green Carrera Glassbox chronograph with a teal green dial, referencing a shade of green used in auto racing in the 1920s and 1930s.

A TAG Heuer luxury watch at Watch Week 2024 in Miami.

CNBC

Julien Tornare, CEO of TAG Heuer, said LVMH’s advantage over other watch brands and groups lies in its constant focus on reinvention and desirability.

“The Swiss watch industry has been quite conservative, to a certain extent,” he said. “But at LVMH, we are pushed to try new things, to move forward. I think that if we still want to attract (a) new generation, it is very important to show that we will work for the future and not for the past.” “.

Many LVMH brands leverage their past to create new designs and models.

Zenith launched its Chronomaster Triple Calendar, featuring a triple calendar moon phase chronograph, inspired by its rare El Primero prototype watch from 1970. The company also launched a new Chronomaster Sport in green, the most popular color fashion for luxury watches in recent years.

A Zenith luxury watch at Watch Week 2024 in Miami.

CNBC

De Clerck said part of Zenith’s appeal to younger watch buyers and collectors is its price. Even though Zenith sells very complicated watches, it tries to offer value, like the Triple Calendar which sells for around $14,000 but could probably cost “thousands more” depending on the level of craftsmanship and complications required, he said.

“We have a very good proposition in terms of price compared to the competition,” he said. “There’s a lot of scrutiny for money, and we want to stay and keep that spirit.”

At the same time, many LVMH brands are moving up the price ladder, with more expensive limited editions. Hublot, known for its big, bold watches, just released a $250,000 limited edition watch called the MP-10 Tourbillon Weight Energy System. Only 50 of these futuristic watches will be produced and they are expected to sell out quickly.

“We call it the art of fusion in watchmaking,” said Ricardo Guadalupe, CEO of Hublot. “We combine the watchmaking tradition of more than 400 years with innovation. We achieve this through design, materials, new mechanics and new ways of manufacturing movements.”

— CNBC’s Crystal Lau contributed to this report.

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