Luxury giant LVMH is making a push to realize share of the worldwide luxury watch business, with a newly formed watch division and an array of latest, higher-priced models.
Sales of luxury watches worldwide are estimated at about $30 billion this yr, based on market research firm IMARC Group. They’re expected to grow to greater than $37 billion by 2032, as global wealth increases and Generation Z and millennials turn out to be more taken with high-end mechanical watches.
LVMH’s jewelry and watch division posted sales of $11.8 billion in 2023, representing a 7% increase in organic growth. The posh giant now has 10 watch brands, including TAG Heuer, Hublot and Zenith, together with fashion and jewellery brands akin to Louis Vuitton, Bulgari and Dior that also make watches.
Last month, the corporate named Frederic Arnault, the 29-year-old son of LVMH Chairman and CEO Bernard Arnault, CEO of LVMH Watches, which incorporates the TAG Heuer, Hublot and Zenith brands.
Analysts estimate sales of those three brands reached about $2 billion last yr.
A Zenith luxury watch at 2024 Watch Week in Miami.
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Frederic Arnault, who launched an array of highly popular recent models at TAG Heuer, is anticipated to bring his concentrate on innovation, cutting-edge materials and inventive designs to the larger brand group. Analysts say LVMH can also proceed to amass attractive brands in the event that they turn out to be available.
In interviews with CNBC during LVMH’s Watch Week in Miami, the brands’ chief executives said 2024 is already shaping as much as be stronger than 2023, when rising rates of interest and fears of recession tempered demand. Executives say they’re especially encouraged by the resilience of the American luxury consumer.
“It’s all about cycles, and the fantastic thing about America is that the cycles are very short,” said Benoit de Clerck, CEO of Zenith. “We undergo ups and downs and all that, but I can reassure you today Zenith is certainly on an upswing with good traction throughout the U.S. markets.”
Zenith luxury watches at 2024 Watch Week in Miami.
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Watch sales are following an identical pattern to the broader luxury market, where the wealthiest consumers remain strongest. Executives say the rich are less affected by rising rates and economic uncertainty, so increasingly more brands are catering to the “super-spenders” and VIP collectors who proceed to spend on the best quality and craftsmanship.
“The high end has been really one in all the foremost drivers of our growth,” said Jean-Christophe Babin, CEO of Bulgari. “I believe the rich greater than ever are desirous to spend money on authentic, reputable and timeless brands.”
Babin said he’s seeing rising strength on the high end throughout Bulgari’s businesses, which now include hotels, fashion and fragrances.
“We sold more high-end jewelry, more high-end watches, more high-end bags,” Babin said, showing off one in all Bulgari’s coveted yellow-gold Serpenti Secret watches that retails for $350,000.
A Bulgari Serpenti Secret watch at 2024 Watch Week in Miami.
CNBC
LVMH can be targeting the fastest-growing segment of luxury watches: women’s watches. While women’s watches account for under a few third of total sales, women’s interest in luxury mechanical watches has soared from more exposure on social media and a growing variety of models designed for ladies. The rising global population of rich women — each self-made and inherited — can be fueling sales growth.
“The trend is toward increasingly more feminine and more unisex watches,” said Babin. “Women have increasing power, by way of independence, autonomy and buying power. We expect that can proceed.”
Reinvention
Within the highly competitive luxury watch world, brands must continually innovate with materials, complications and designs to realize share and keep collectors engaged.
Carrera Plasma Diamant d’Avant-Garde Chronograph Tourbillon at 2024 Watch Week in Miami.
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TAG Heuer, which has its roots in automobile racing, scored an enormous hit with its Carrera Plasma, using lab-grown diamonds. Its Carrera Plasma Diamant d’Avant-Garde Chronograph Tourbillon is priced at upward of $500,000 — and has a waitlist of greater than two years.
TAG Heuer also unveiled a teal-green Carrera Glassbox Chronograph with a teal-green dial, referencing a shade of green utilized in auto racing within the Twenties and Nineteen Thirties.
A TAG Heuer luxury watch at 2024 Watch Week in Miami.
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TAG Heuer CEO Julien Tornare said LVMH’s advantage over other watch brands and groups is its relentless concentrate on reinvention and desirability.
“The Swiss watchmaking industry has been quite conservative to some extent,” he said. “But at LVMH, we’re pushed to try recent things, to maneuver forward. I believe if we would like to still be appealing to [a] recent generation, it’s extremely necessary to point out that we are going to work for the long run and never for the past.”
Lots of the LVMH brands are mining their storied pasts for brand new designs and models.
Zenith launched its Chronomaster Triple Calendar, featuring a triple calendar moonphase chronograph, inspired by its rare prototype El Primero watch from 1970. The corporate also launched a recent Chronomaster Sport in green, the most well liked color for luxury watches lately.
A Zenith luxury watch at 2024 Watch Week in Miami.
CNBC
De Clerck said that a part of Zenith’s appeal to younger watch buyers and collectors is its price. While Zenith sells highly complicated watches, it tries to deliver value, just like the Triple Calendar that sells for about $14,000 but could probably be priced “hundreds more” based on the extent of expertise and complications required, he said.
“We now have a excellent proposition by way of price versus the competition,” he said. “You get plenty of look ahead to the cash, and we would like to stay and keep that spirit.”
At the identical time, many LVMH brands are moving up the worth ladder, with dearer, limited editions. Hublot, known for its daring, large watches, just launched a $250,000 limited-edition watch, called the MP-10 Tourbillon Weight Energy System. Only 50 of the futuristic watches shall be produced, and it’s expected to quickly sell out.
“We call it the art of fusion in watchmaking,” said Hublot CEO Ricardo Guadalupe. “We’re connecting the tradition of watchmaking of over 400 years, with innovation. We try this through design, through materials, recent mechanics and recent ways of creating movements.”
— CNBC’s Crystal Lau contributed to this report.