Grainy_LVMH

Diversification into luxury goods

Agenda • Luxury Industry • Moet Hennessy Louis Vuitton - LVMH • SWOT • Competitor Analysis • Short& long Recommendations

Luxury Goods Industry What is Luxury? Luxury Goods Industry – History Luxury Goods Industry – Current

What is Luxury?

Definitions… If everyone owns a particular brand… by definition it is not luxury Luxury is associated with high price, or high quality Luxury is about the quantity of expensive goods Luxury is derived from unique craftsmanship & technical superiority Luxury is to project certain social status or wealth Luxury is to satisfy an emotional desire for subjective intangible products

Luxury Goods Industry - History • 18th Century – viewed as the beginning of luxury history in Europe • For centuries, luxury goods industry which has been controlled by the family business provides services to the most affluent sectors of society • In recent years, for the wave of acquisitions, most of these family-run enterprises were merged by the Commercial giant

Luxury Goods Industry – Global •

Before the 1990s Global luxury industry kept 10% -20% of the unconventional speed development, and created a 250 billion US dollars on the global market

•

2000, the industry began to turn constantly troughs period

•

Since 2000, the global luxury goods market in a state of contraction

•

2004 luxury industry profit has declined 35.7%.

•

2006 Global sales of luxury goods rose 10 percent to a record 150 billion

Luxury Goods Industry - Current • Consumer consumption rates – based on global market share luxury goods market share in the global distribution

14% 41%

12% 16% 17%

Japan America Europe China Others

The Group is active in 5 Sectors

Perfumes & Cosmetics

Watches & Jewelry

Fashion& Leather Goods

Selective retailing

Wine & Spirits

1743

1743

1854

1743 1854

1860

1743 1854 1860

1947

1743 1854 1860 1947

1961

Bernard Arnault

+ 1987= LV

L

=

> 64,000

6

employees

1,700 = >stores +

= +

> 60 Prestigious brand

+

=

+TODAY

worldwide

>$ 17 billion US Revenue

+ Future

=?

Swot Analysis

Strength • -Powerful and prestigious brand portfolio • -World renowned • -Powerful distribution capabilities • -New product launches • Wines and spirits Moët & Chandon; Hennessy; Louis Vuitton, Kenzo, Givenchy, Fend Christian Dior, Guerlain, Parfums Givenchy Dior, Fred, Omas, TAG Heuer DFS Galleria, Miami Cruiseline Services, Sephora, Le Bon Marché

Weaknesses • -Selective Retailing division continued poor performance • -Higher exposure to US Dollar than its peers • -Weak sales performance

Opportunities • • • •

-A change in investor’s perception -Expansion into new countries -Product diversification -Advertising impact

Threats • • • •

-Champagne production -Price deflation -Economic cycle -Imitators

Swot Analysis

Strength • -Powerful and prestigious brand portfolio • -World renowned • -Powerful distribution capabilities • -New product launches • Wines and spirits Moët & Chandon; Hennessy; Louis Vuitton, Kenzo, Givenchy, Fend Christian Dior, Guerlain, Parfums Givenchy Dior, Fred, Omas, TAG Heuer DFS Galleria, Miami Cruiseline Services, Sephora, Le Bon Marché

Weaknesses • -Selective Retailing division continued poor performance • -Higher exposure to US Dollar than its peers • -Weak sales performance

Opportunities • • • •

-A change in investor’s perception -Expansion into new countries -Product diversification -Advertising impact

Threats • • • •

-Champagne production -Price deflation -Economic cycle -Imitators

Competitor • Remy Cointreau • PPR ( Pinault-Printermps-Redoute) • Prada

• Richemont

Remy Cointreau • Founded: Merger of Remy Martin(1724) and Cointreau(1849), France, 1991 • Products: cognac, wines, rums, liqueurs, champagnes • Sales (mil.) in 2006: $963.9 • Net income (mil.) in 2006: $89.2 • Employees: 1346

Advantage • Customer loyalty • The decision to regain control of worldwide distribution • Increase brand awareness and market leadership

PPR(Pinault-PrintempsRedoute) • • • • •

Founded: Francois Pinault, France, 1963 Sales in 2006 ( mil. ): $23,656.2 Net income in 2006 ( mil.) : $965.9 One year net income growth : 42.2% Employee in 2006 : 78,453

Gucci • Subsidiary of PPR • Founded: Goccio Gucci, Italy, 1921 • Products: cosmetics, shoes, perfumes, Leather fashions, watches

Advantage • Marketing strategy • Strategic deployment • Designer

Prada • Founded: Mario Prada, Italy, 1913 • Products: costumes, hand bags, suitcases, watches, perfumes

• Company type: private

Advantage • Designer • Marketing strategy • Brand strategy

Richemont • Founded: Anton Rupert, Switzerland, 1988 • Products: jewelry, watches, leather goods, pens • Sales in 2006 ( mil.) : $ 5,201.9 • Net income in 2006 ( mil.) : $1,323.4 • Employee: 16,400

Short Recommendation • Customer Service – providing better service to customers to keep them • Company growth – serving consumers (i.e. starbucks)

Long-term Recommendation • Piracy & counterfeit – competition between the real and fake products

Long-term Recommendation • Focus On Potential Market (i.e. Asia Market) luxury goods market share in the global distribution

14% 41%

12% 16% 17%

Japan America Europe China Others