Politique Internationale — LVMH is the world leader in luxury and France is also in first place in this sector. Does the American public see your Group with its French identity as a sort of ambassador of French excellence and of the French art de vivre?
Bernard Arnault — Allow me to tell you an anecdote which, to me, perfectly conveys what our Maisons (brands) represent abroad and, in particular, in the United States. More than 40 years ago, I was speaking with a taxi driver in New York. He told me how much he liked France. I asked him if he knew Georges Pompidou, the French President at the time. He replied, ‘No, but I do know Christian Dior.’ At that moment, I realized that this name was magical and that this fashion house embodied our country across the globe; and that it was, after Napoleon, the best-known French name in the world. I said to myself that there is no domain more evocative than that which promotes French savoir-faire, or craftsmanship.
Today, this philosophy prevails in the 75 Maisons or houses that constitute our Group and generate pride in our 200,000 employees around the world. Our customers and our creators are very attached to our history and our heritage; our archives are just as good as those of the greatest museums. And this is not a fantasy, it’s a necessity because I believe that we have the duty to preserve this know-how which sometimes goes back several centuries. To do this, we naturally create new products and new experiences but they must always relate to the history of the Maison.
In fact, the history of our houses is linked to that of the major European capitals, for which they are also superb ambassadors. Recently, we opened the doors of our houses to the public at no charge for the Journées Particulières. Some 200,000 people filled our sites during a weekend to discover the magic of the craftsmanship behind our lasting and exceptional goods. We welcomed guests at seven sites in the United States, two of which had never before received visitors: Louis Vuitton’s Rochambeau Ranch in Texas and the Tiffany Jewelry Design and Innovation Workshop in the heart of Manhattan. We also constantly seek out new ways to highlight our heritage – it might be through fashion shows, one of the Group’s main showcases – but also through the very many exhibitions organised all year long. In this sense, Louis Vuitton, for example, is not just a fashion and leather goods house but also a house of culture. The Louis Vuitton Foundation diffuses and infuses the same originality throughout the world. Since its creation, it has received millions of visitors from all over.
P. I. — The LVMH Group’s 2022 results show that the United States remains your most important single market with 27% of turnover. What can you say about performance there?
B. A. — The United States has always been vital for our Group, regularly accounting for more than 20% of revenue in recent years. This year, the United States will be the Group’s main market. This is a source of pride and just recognition of the remarkable work put in by our teams. The United States is more than a simple market, it is the third pillar of our Group after France and Italy. We have 12 American houses, 13 production sites, more than 1,000 boutiques and nearly 42,000 employees. Investing and developing there is part of a long-term strategy that has been in effect for more than 30 years, and we are only at the beginning.
P. I. — The Fashion and Leatherwork branch of the group counts on the Made in USA list through production sites with three leather workshops (two in California and one in Texas). What is the ‘dialogue’ between the Made in France and the Made in USA?
B. A. — The Made in France or the Made in Italy, for our Italian houses, remain the heart of our manufacturing activity and that will not change. Our history is intrinsically linked to our two original countries, France and Italy. The only exception is in the United States with three Louis Vuitton workshops in California and Texas. They produce a selection of leather goods exclusively destined for American clientele but which incorporate the same level of savoir- faire and excellence as those crafted in France. In California as in Texas, we have trained artisans who all possess a love of leather and who have acquired the extraordinary Louis Vuitton craftsmanship. It was far from random that we chose a former ranch called Rochambeau for our workshop in Texas.
But this remains an exception which conveys too, in a certain way, the particular relationship that we have with the United States. Even if our houses are proudly tied to their country of origin, it is also there that they have written their history and where they draw their inspiration to continue to innovate and create the most desirable products which promote French culture and know-how abroad.
P. I. — You mentioned, facing the President of the United States at the inauguration of your leather workshop in Texas in October 2019, the question of counterfeit goods in the United States, especially on big e-commerce sites. Has this issue developed since then in the way that you wanted?
B. A. — Counterfeiting is more than a problem, it’s a real scourge because it is driven by criminal or terrorist organizations. On a world scale, it is estimated that the volume of counterfeiting in its totality represents annual criminal earnings of about $700 billion and this money then feeds trafficking and violent activities. We work closely with public authorities and large digital actors (platforms and social networks) everywhere in the world to uncover and eradicate this illegal trade. We do this to protect the buyers of these products as the majority of them do not know that the goods they are buying are fake. The criminal actors, who have set up vast production and logistics networks to copy the real products, quite often make dangerous goods and are cheating the buyers.
Take the case of perfumes, among the most counterfeited products: no control is carried out on their ingredients which sometimes provoke burns – or worse – on those who buy them.
Most countries are generally very receptive to our warnings and our department that fights counterfeiting works closely with police or customs everywhere in the world, not forgetting the surveillance of the Internet and social networks where it is possible with a few clicks to find crude copies. Recent progress in legislation on the European level will oblige platforms to watch over better and withdraw more quickly all that has any tie to counterfeiting. This is a first step but, until now, I note that the big platforms, especially the social networks, are only doing the strict minimum to fight this worldwide plague. Nonetheless, a recent decision by the Court of Justice of the European Union has just pointed the finger at their responsibility, particularly for the sale and offer of counterfeit products via their marketplaces; this is a step in the right direction.
P. I. — Tiffany was going through a difficult phase, with declining results, when you bought it in January 2021. After two financial years inside LVMH, what is the economic situation of this prestigious American brand?
B. A. — Tiffany is the most famous American luxury brand. In the United States, it is an institution: does not every American woman dream of a Tiffany engagement ring? Tiffany is a desirable house with a strong and deeply American history. Nonetheless, it had been stagnating for five years before we arrived in 2019, whereas the market was in full expansion during that same period. We undertook a vast plan to modernise the boutiques, to develop the products and update public relations. All the while concentrating on the continuation of Tiffany’s magnificent history and the incredible quality of its products.
Despite the sweep of this programme, this Sleeping Beauty is now wide awake and the two last financial periods were record years for Tiffany. All the same, its flagship boutique on 5th Avenue in New York was closed for a complete makeover. This year, we shall have the pleasure of reopening this mythical spot and it will become, I believe, again a cult place for New York, the United States and the world.
P. I. — You said in November 2019 at the time of the agreement for LVMH to buy the jeweller Tiffany, ‘this is an icon of America which is becoming a little bit French.’ How did the Americans react to this transfer to the French flag of a symbol of the American dream, enhanced by Hollywood?
B. A. — Joining the LVMH group means at one and the same time becoming a bit French and joining our family. Especially, it means benefiting from the backing of a group that has always developed its houses while ensuring, in all details, that they retain their authenticity and their charm. While, yes, it became a little bit French because it joined a group under the tricolour flag, but Tiffany remains and will always be an American brand, founded more than 200 years ago and one of the strongest incarnations of the ‘American dream’.
P. I. — What are the most striking characteristics that bring together or separate French and American business cultures?
B. A. — In my career and in my life, I had the luck to travel very many times to the United States, I even lived there for a few years at the beginning of the eighties. I have therefore a very particular link to this country which gives the impression that everything is possible provided you give yourself the means and make the necessary effort. Without using the cliché of a more favourable business climate, I would rather say that the United States retains a share of optimism and self-confidence in all circumstances which helps it overcome crises, even the most serious … Whereas in France, we are perhaps more reserved, less sure of the future and more critical of liberal economics, even though we live in the world’s most beautiful country and in one that has the greatest potential to develop its economy.
I dream that entrepreneurship should no longer just be seen through an economic prism, criticised by some of the ideological ‘right-thinking’ population, but fully as a way of serving one’s country and its inhabitants by achieving things that are concrete and useful and that enhance living standards. When we have succeeded in changing that in France, we shall also be able to invent the GAFAM of tomorrow.
P. I. — Is the American market still, for France and Europe, a precious indicator of trends to come in consumption? Sephora, especially, last year announced the opening of 260 boutiques in the United States, the distributor’s most ambitious expansion project since it moved into the American market more than 20 years ago. Does that mean that LVMH still gambles on the future of physical stores despite the constant development of digital commerce?
B. A. — In effect, the United States has always been one of the laboratories allowing us to identify global emerging trends. In this sense, what we have achieved with Sephora in the United States has been fundamental to accelerating the brand’s growth in other markets in Europe. Over there, we realised that the experiences Sephora offers constitute an essential marker of its popularity. Naturally, the quality of what is on offer also helps; if you come for a product in the store, you come back for a repeat experience.
In a world where the Internet has become central, the boutique remains a very strong anchor. We have invested considerably in e-commerce, particularly since Covid, but we continue to invest even more in our stores. They offer a contact that Internet cannot make up for … not for the moment at least.
Nothing replaces the pleasure of crossing the doorway of a Dior, Vuitton or Celine boutique for a unique experience that even the best Internet site cannot reproduce. There is also all that magic of personal contact, all those surprises that our boutiques provide. We wish to preserve this magic; our boutiques are places full of life, pleasure and discovery, well beyond the act of purchase itself.
P. I. — In cultural terms, do notions of luxury and beauty display discernible differences between France (or Europe) and the United States?
B. A. — One of the challenges facing the group is maintaining the specifics and the identity of our houses by addressing a worldwide market with products that often become planetary bestsellers.
A product conceived in the historic workshop of Christian Dior on Avenue Montaigne can be appealing in Europe, as it can be in the United States or China. And if ‘beauty’ is obviously very subjective, the products and experiences that we propose convey a form of universalism; a Capucines bag from Louis Vuitton or a Lady Dior remain icons everywhere in the world.
That is also the strength of our Group, which knows how to make people dream with a dash of history of France, Italy or the United States, for example.
P. I. — You have become an important actor in American wine, with the purchase of prestigious vineyards in Napa Valley in California. Can one talk of a Franco-American wine culture (exchanges of know-how and influences for French wine)?
B. A. — Joseph Phelps is the third domain in the Moët Hennessy portfolio in the United States and certainly one of the most prestigious! It has all its rightful place beside our other great wines distributed in the United States such as Cloudy Bay produced in New Zealand, an exceptional white wine, or Whispering Angel, the well-known rosé de Provence created by Sacha Lichine. Both are so successful in the United States that we regularly found ourselves out of bottles. And we wanted an excellent red wine to complete our range; with Phelps and its famous Insigna vintage, I think that we have found a family winery of great quality that perfectly fits in with our values.
Like Bordeaux or Burgundy, the Napa Valley is a great wine land, but it has suffered a lot these past few years because of the fires that have hit California. Incidentally, we lost a vineyard there, Newton. What we experienced in California also allows us to learn lessons for vineyards in France and elsewhere in the world, especially on the environmental level.
It is one of the rare sectors that we have pooled on a group scale, in a big research and development centre situated in Champagne. That allows us to centralize a large amount of data that then help us to interpret better big meteorological or climatic phenomena that can be devastating for our vines.
P. I. — Allow me to come back for a moment to a point that you made at the beginning of our discussion: can one say that the luxury industry is a form of French soft power, knowing that you have absorbed many foreign brands into your Group?
B. A. — Fashion and luxury in general represent obviously much more than a single sector of activity. When we talk of Christian Dior, Louis Vuitton, Hennessy, Dom Pérignon, Celine and Guerlain, etc., it is a bit of the history of France that we are talking about and that we are making known in the world. A Christian Dior dress or bag is a bit of Paris, a Tiffany ring is a bit of America, a Fendi cape is a bit of Italian dolce vita …
In fact, our houses are more than brands, they are also cultural ambassadors for their countries of origin. If the image of the country or the cities is tightly linked to our houses, we go into action very strongly alongside them for largescale sponsorship projects. Everyone remembers our commitment to the restoration now underway after the terrible fire in the Notre-Dame de Paris cathedral; but we have also contributed to the renovation of the château of Versailles, the Louvre and even the Coliseum in Rome, among other initiatives …
P. I. — Montesquieu, the Enlightenment philosopher, spoke of ‘sweet trade’ to evoke the pacifying role of exchanges in relations between peoples. Today, we see tensions that are tougher and tougher in international relations around commercial stakes. China is jostling the hierarchy of nations that came out of the 20th century and Europe and the United States, political allies, often find themselves in conflict over trade. Are these tensions likely to affect the luxury sector which, by nature, is extremely globalised?
B. A. — In my professional life, I have had ample occasion to become aware of the positive or negative effects of one or another policy aimed at favouring one country over another. In these cases, such rules are in general a lose-lose gamble which, incidentally, are often halted or amended by another government in the concerned country. As an entrepreneur, I believe deeply in the liberty to initiate new projects and to succeed. I understand that barriers can be erected in any given sector with protectionist or diplomatic aims, but this is never good for the world economy because it amounts to brakes that are going to limit the growth of companies and their capacity to create value, employment and, therefore, generally improve the standard of living for inhabitants of the countries in question.