Why billionaire Bernard Arnault, the world’s third-richest man, likes being number one
They say in Paris that all roads lead to Arnault. That'south Bernard Arnault, whose ruthless arroyo to acquisitions has earned him the nickname "the wolf in cashmere" and helped him recently to overtake Warren Buffett as the world's third-richest human being. His empire permeates Paris. Simply the other 24-hour interval his luxury grouping LVMH launched a new maison with pop star Rihanna; when a fire devastated Notre-Dame, the Arnault family was on hand with a €200m (S$307m) donation to fund its reconstruction.
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But the human being himself is deeply private. Our luncheon is almost 18 months in the making. Not 1 to waste product whatsoever fourth dimension – I'm told Arnault'due south usual business lunches in LVMH's private dining room oftentimes concluding only half an 60 minutes – he picks every bit our venue Le Frank, the restaurant at his own Fondation Louis Vuitton. A Frank Gehry-designed cultural centre in the west of Paris, information technology reflects the Medici-like influence the Arnault family unit has steadily caused.
I'grand waiting for its patriarch at a discreet tabular array, gazing out over the water that surrounds the building, which is reminiscent of a sailboat opening upwards in the wind. Arnault glides into the restaurant, largely unnoticed past its other patrons. He stoops slightly when he walks, speaks softly, and has a piercing blue gaze. Expansive when it suits, he can shut downward an avenue of conversation with a terse sentence.
Arnault looks trim in his trademark Christian Dior suit; his physique is honed on the tennis court, where he has even played a set with Roger Federer. "Obviously I lost six-0," he said, "but I won a point." This twelvemonth, he added, "my goal . . . is to gain two points against Roger Federer."
Age has conspicuously not mellowed his desire to win. The 70-yr-former has a coercion to possess beautiful brands and transform their creativity into profits. He has over the past iv decades congenital LVMH from a almost-broke French cloth company to a global group with €46.8bn sales in 2018, whose lxx brands include Louis Vuitton, Dior, Givenchy, Veuve Clicquot and Dom Perignon. Bloomberg estimates his fortune at US$100.4bn (S$135.9bn).
"I always liked being number ane," Arnault said simply. "I did not succeed at the pianoforte, I did not succeed at tennis. I consider that success is to make it at a point where all my teams, the group is the number one in the world." He added, without irony: "We are still minor. We're just getting started. This is very fun. We are number one, but we tin can go farther."
"I always liked being number one. I consider that success is to arrive at a signal where all my teams, the group is the number one in the globe." – Bernard Arnault
Le Frank'south carte is archetype French cuisine inspired by the Mediterranean. "Everything is good here," said Arnault (it's his restaurant, after all). On his recommendation I order the petits pois veloute, followed by salmon tartare. He opts for the salmon tartare and and then sea bass on crushed potatoes. He orders two glasses of Chablis. When they make it, minutes later, Arnault toasts our wellness and takes a sip; his glass of wine remains untouched for the rest of the meal.
LVMH may be synonymous with glamour, but Arnault's own background is in real estate. Born in Roubaix, an industrial urban center in the north of France, later on completing the Ecole Polytechnique, 1 of France's prestigious grandes ecoles, in 1971 he joined the family construction business organisation. It was around so that he visited the US for the start time and spotted the ability a luxury make could have. He asked a New York taxi driver what he knew of France. "He could not name the president only he knew Dior," Arnault often recounts.
The story stuck in his mind. Years later, in 1984, he lobbied the French authorities to permit him take control of a near-bankrupt fabric visitor, Boussac. Information technology owned a gem that he wanted: Christian Dior. Arnault bought Boussac for a symbolic one franc, having assured the government that jobs would be preserved. Within five years he had sold off about of its assets, keeping Dior. The regime looked on, powerless, as he fired effectually 8,000 workers, bringing a new Anglo-Saxon ruthlessness to the genteel world of 1980s French business.
A lunchtime rush of people has arrived, seeking sustenance afterwards a morning of exhibitions, and taking their seats beneath Frank Gehry's fish-lamp sculptures that hang from the ceiling. Arnault settles back and recalls his first accelerate into the luxury world. His mother had a "fascination for Dior" and wore its Diorissimo scent, he said. Her son would apply the make as the cornerstone of his global luxury grouping.
"I told my squad nosotros volition build the showtime luxury grouping in the world," he said. "Obviously information technology was very aggressive, just information technology galvanised the team and we started to build." His vision was to create a structure where private brands enjoyed creative liberty while having the financial bankroll and synergies of a big group behind them. "The biggest advantage is that it allows yous to hire the best people," he added.
It was Arnault's takeover of LVMH in 1989 that confirmed his form. He engineered a majority stake in the group – itself the product of a merger between style firm Louis Vuitton and champagne and cognac producer Moet Hennessy – then ousted the Louis Vuitton president Henry Racamier from his family visitor. Arnault would deploy the same playbook of ousting founders, dividing families or driving a wedge between business partners with other acquisitions such equally Givenchy, Chateau d'Yquem and Duty Free Shoppers. Only rarely has this strategy failed, most notably at luxury brands Gucci and Hermes (although Arnault still made hundreds of millions of euros from each attempt). The Dumas family, owners of Hermes, successfully went to court to forbid LVMH from mounting a takeover. I suggest to Arnault that some would call him a predator.
"I do non know," he said, nonchalantly. (He's clearly well enlightened of his reputation.) "You practice not look them to say squeamish things if they are competitors."
For a man who thought nothing of splashing €iii.7bn on high-end jeweller Bulgari or US$3.2bn on travel and hospitality grouping Belmond, there was one "luxury" conquering that was a stretch too far: The Financial Times. Arnault admits he looked at buying the FT dorsum in 2022 (in the end it was sold by Pearson to Nikkei for £844m; Southward$1.45bn). He decided confronting making an offering, he said, because information technology was "too expensive".
And if you had bought the FT it would take been complicated for us to write well-nigh you, I respond. "We could not do this dejeuner," said Arnault, laughing. "That would take not worked."
My pea veloute is fresh and lite. Over the starters, conversation turns to the future of the €260bn luxury goods industry. Arnault led the charge to consolidate the marketplace from a fragmented cottage industry into a slick corporate car. Critics say that this has led to a democratisation of luxury which has enriched the tycoons behind the multi-brand conglomerates while killing off truthful craftsmanship. Profits come non from haute couture but from perfume, make-up and accessories lines that let ordinary people to buy into the dream for as little as US$20 a lipstick.
"What you call true luxury is a relative concept for each individual," said Arnault. He believes that LVMH's function is to "produce products and experiences that convey an authentic sense of value to our customers.'' This thought of experiential luxury is what LVMH wants to develop with its recent conquering of Belmond, which owns the Hotel Cipriani in Venice and the Orient Express.
But even the king of luxury seems a little tired of it. "The word luxury is a piffling hackneyed," he went on. "I prefer the expression 'product of loftier quality'. What matters most is that in 10 years' fourth dimension our brands are as desirable as they are today. Profit is a upshot of what we do well; it should never become a goal."
"The word luxury is a niggling hackneyed. I prefer 'product of high quality'. What matters nearly is that in ten years' time our brands are as desirable equally today." – Bernard Arnault
The fundamental to LVMH'southward success has been its "get-go mover" reward, notably in Communist china, where Arnault is given a head of country's welcome when he visits, spirited through the traffic in a motorcade. In 1992, equally China was starting to open up under Deng Xiaoping's market-economy reforms, Louis Vuitton opened a store in Beijing, its first in mainland China, in the basement of the Palace Hotel (now the Peninsula Beijing). There was no hot h2o in the hotel and bicycles on the roads, rather than cars, Arnault recalls, as our starters are whisked abroad. But he took the view that "it'southward good to start." He added: "We are the first, merely eventually there will be a market."
The bet paid off. Since so, China has driven luxury spending, with LVMH i of the main beneficiaries. Arnault strikes a conciliatory note on the recent Sino-American trade tensions. Despite "problems in the curt term", he believes China and the U.s. "will eventually detect an agreement." Chinese consumers are showing no signs of slowing down and are repatriating spending to the mainland, he says. In the longer term, Arnault said he'south "optimistic" that the same trends that explicate the success of the past 30 years, such as emerging economies and rise living standards, will keep to bring opportunities for luxury goods brands, and open up new markets such as Africa.
Dorsum dwelling house in Paris, where LVMH stores dominate the glitzy streets in the metropolis centre, the group has faced the ire of the anti-government gilets jaunes (yellow vests) movement. At their peak this wintertime, the weekly protests forced many LVMH brands to shut their store fronts.
As we begin our main courses, Arnault expounds on the gilets jaunes. It's true there are inequalities in France, he said, just if you lot compare it with other European countries, "France is very well placed, considering [it] redistributes a lot."
"French republic is the country that is the champion of taxes," he continued. But many of the complaints from the gilets jaunes are "totally contradictory" considering they say "we pay too much tax, but we must increase state spending".
Is Emmanuel Macron's presidency the last chance to reform French republic before a possible election of Marine Le Pen's far-right Rassemblement National? Arnault does non believe populists tin come up to power because he says the bulk nonetheless reject them and "their theories are an economic disaster". Unsurprisingly he welcomes the atmosphere fostered by Macron, that "the wealth of a state is made by the success of its companies" – not by state-backed jobs or public spending.
How hard was it to build the world'south third-largest fortune in a country where wealth isn't always historic? Arnault bats the question aside.
"What is my wealth?" he asked. "Information technology is the LVMH shares . . . the upshot of what we congenital with the LVMH grouping." He reeled off figures: Under his tenure the group has grown from around 12,000 to 156,000 people, hiring between 12,000 and fifteen,000 people each year. "And nosotros are the group that pays the most taxes in France."
"What is my wealth? It is the LVMH shares . . . the result of what we built with the LVMH group." – Bernard Arnault
Arnault moved to the US for a few years in the early 1980s to avoid a hostile business environment and wealth taxation nether Francois Mitterrand. I remind him that in 2012, under socialist president Francois Hollande, he applied – unsuccessfully – for Belgian nationality. He says somewhat unconvincingly the motility was intended to help him plant a private foundation to preclude his five children from selling LVMH shares if he were to dice.
"I was never resident in Belgium," he said. "I always paid my taxes in France."
The time has come to broach another of Arnault'due south least favourite topics: Succession. LVMH'southward top management say it's a "taboo" subject internally, despite the fact that most all of Arnault'southward children are in the family business. Of the 2 children from his get-go matrimony, Delphine, 44, is executive vice-president of Louis Vuitton, LVMH's turn a profit engine, while Antoine, 42, runs menswear brand Berluti and is LVMH's caput of communications. Of the iii sons from Arnault'due south second marriage to concert pianist Helene Mercier, only the youngest, Jean, 21, is yet to have up an official role at LVMH.
The other two are starting to brand their mark. Alexandre, 27, is chief executive of Rimowa, the High german luxury suitcase maker that LVMH caused in 2022 at his suggestion. Frederic, 24, is strategy and digital director of watch brand Tag Heuer and the but one of the v children who studied at Arnault'south alma mater. He does "extraordinary things" on the piano, Arnault senior tells me admiringly. Arnault too is a concert-level pianist and wooed Helene by playing to her on one of their early dates.
Handing over the company to the adjacent generation volition be done "according to their will, their abilities, their skills," said Arnault. We eschew dessert and order two espressos. Which of your children is most similar you, I asked. Arnault will only say that "they all take something of me." When pressed, he said impatiently, "information technology's not for me to explicate to you the personalities of my children."
The maitre d' comes to check on the states. Equally he does with LVMH's Paris store managers nearly Saturdays, Arnault quizzes him on how busy the restaurant has been. I reflect that it has been almost 20 years since Arnault'southward biggest defeat: When Francois Pinault emerged victorious confronting him in a long-running and acrimonious battle for control of Gucci. Does the missed acquisition opportunity even so grate, especially given how successful Gucci has been under the Pinault family's ownership?
"I detest the past," said Arnault, deadpan. "What interests me is the future. Have a chocolate."
When the Pinault family appear in April a €100m donation to help rebuild Notre-Dame after the fire, I was not the only i in Paris who waited for Arnault to trump information technology. Sure enough, hours later on, the Arnault family announced a €200m donation. Arnault doesn't flinch when I point out that his rivalry with the Pinaults appears to extend fifty-fifty to charitable donations. Relations with Pinault are "absolutely fine," he said.
Lunch has stretched to an hr and a one-half, and Arnault is looking anxious to render to work. Checking information technology's really true that the FT pays for lunch, he reluctantly asks for the bill "for madame". It's the start time he's had dejeuner with a adult female and let her pay, he said, only consoles himself that "I did not choose a iii [Michelin] star restaurant."
Days later, someone bids United states of america$iv.6m for a private luncheon with Buffett. At a mere €169 for luncheon a deux with Arnault, I think the FT's expenses section has got off lightly.
Harriet Agnew is the FT's Paris correspondent
By Harriet Agnew © 2022 The Financial Times
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Source: https://cnalifestyle.channelnewsasia.com/people/bernard-arnault-239936
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