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Louis Vuitton: The origin and the takeover story!

Created on 04 Mar 2022

Wraps up in 6 Min

Read by 4.9k people

Updated on 26 Jul 2022

It’s Loo-ee Vuh-tawn. Not Lou-iss Vuii-tton. The number one luxury brand in the world, under the mega-conglomerate LVMH, is valued at 329 billion US dollars as of 2021. The owner of this brand is the third richest person standing on the face of the Earth today, with a net worth of 188.6 billion US dollars.

Do you know how big that number is? Ambani’s net worth as of March 2022 is 89.7 billion US dollars, so Mr Louis Vuitton CEO is double the worth of Ambani. 

So the next time you wanna ask someone, “Ambani hai kya?” instead, ask them, “Arnault hai kya” and show off that you know what their real worth is! Who is Arnault? We shall find out about it today!

A homeless boy in the 19th Century

The history of this company dates back to the 19th century in the land of France, where a homeless teenager was dreaming of making loads of dough, at a time when he had no money to put a shelter over his head and no food to feed himself. He worked at odd jobs under artisans and craftsmen, doing paltry things to survive. The money he was paid for these was paltry as well. But the one good thing that came out of it was that he learnt skills he couldn’t have anywhere else. 

This homeless boy was none other than, no you guessed wrong- not Arnault, but Louis Vuitton himself. And yes, the brand is named after a person. 

Louis Vuitton was born to a farmer and hat maker, and due to their poor financial condition, he had to dip his hands in the mud of his farmland at a very young age. But this was just the start of it. Louis was just 10 when his mother passed away, and his father remarried. His stepmother was just as you picture a stereotypical stepmother to be, wicked, cruel and heartless. She made Louis’s life a living hell. He tolerated her for years until he just couldn’t anymore. When he turned 13, he absconded. This was when he had no food and no money. But his light wouldn’t be dimmed by his miserable condition. When he worked under the craftsmen, he learnt to work with metal, stone, fabrics and wood. 

With the advent of the first railway in Paris, travelling was easier than it ever had been and aristocrats needed boxes to store their belongings. Louis decided to step up and found a job under a trunk maker and packer as an apprentice. Very soon, his work was appreciated by all and then the Empress of France herself appointed him as her personal box-maker. 

Things started to look good thereon. After a year of working for the Empress, Louis opened his first shop. Now, he had the room to grow; he came up with ideas that changed the perception of people regarding fashion accessories.

Louis started making the trunks of canvas instead of leather, as they were lighter, durable, and water-resistant. Louis made handbags cool and trendy in an era when they were considered inelegant and bulky. 

To keep up with the rising demand, Louis was joined by his son, Georges. Gradually younger generations kept on joining the business and not to sound insensitive, but the older generation started to pass away one by one. Below is the family tree explaining the hierarchy of the Vuitton family.

But didn’t we talk about an Arnault in the beginning? You must be like, “I don’t see him anywhere in sight”. So, here it is. 

The hostile takeover

The three brothers in the last family tree could not agree on the business-related decisions after their father’s death. So they instead decided to hand over the reins to their sister’s husband- Henry Racamier, the last legit Vuitton heir. We will continue the story from there. 

Under Henry, Louis Vuitton’s sales reached from $20 million to $260 million in six years, following which, in 1984, Louis Vuitton was made public (IPO).

By 1987, the sales of the company reached nearly 1 billion dollars. But, as the numbers rose, the threat of an outside takeover rose as well. To prevent this, Henry merged the century-old company with Moët Hennessy, a luxury champagne and cognac producer, to become the company we know today - Louis Vuitton Moët Hennessy or LVMH. 

Slowing management disputes started to broil between Henry and the president of Moët Hennessy. Henry was on edge, and he asked an affluent property developer to be his ally and help him. The property developer agreed to it.

But in a crazy turn of events, when Henry found himself stuck in the management of his company, the property developer was secretly buying a controlling interest in LVMH. By the time, the intentions of his so-called “ally” became clear to him, the “ally” had already bought 45% of the controlling interest. He also gained the favour of the administration of Moët Hennessy.

Thus, when Henry was busy safeguarding his company from an outside takeover, his own close confidant stabbed him in the back and sided with the people he was hired to combat. A long legal battle went on between the ally and President Henry Racamier. Finally, he won and kicked Henry out of his own company. 

Can you guess who this “ally” was? C’mon?

The Arnault we talked about. Bernard Arnault, the second richest man in the world. Bernard Arnault, CEO and chairman, LVMH. Bernard Arnault, a French businessman, investor and art collector as wiki would put it.

The big changes

In the 80s, when the demand for luxury goods was on the rise, Arnault sensed the craze and found a failed French luxury brand. He bought the brand using his family’s money and made some big changes. The changes involved discarding non-performing assets. But he did not stop there. He fired 9,000 employees of that company to cut down costs. 

You know this company as well. It is the luxury brand, Dior. Arnault even got the name ‘The Terminator’ for the same.

The Arnault style

Arnault has a style and has become quite popular for executing it correctly. The thing he did to Henry Racamier, he would do that to multiple companies. He would start buying stakes in a company indirectly through subsidiaries of LVMH, until LVMH essentially owned a controlling stake in that particular company. Arnault tried the same with Hermès, and so with Gucci. But failed in these two brands among all of his other victories. 

LVMH and Arnault have not stopped with this shopping spree; as of today, they own 75 luxury brands. 75!

Below is a list of the most famous brands owned by LVMH. 

Top 5 companies owned by LVMH

  • Tiffany & Co.
    Has the pop culture not pictured this brand in good light enough for you to know how big this company is? A proposal is not a proposal if it is done without a Tiffany ring! And, yes. It is owned by LVMH. LVMH acquired it in 2021 for $15.8 billion. This deal is believed to be the biggest luxury brand acquisition ever!

  • Bulgari
    Famous for its creative and colorful jewellery design, LVMH acquired this century-old luxury brand in 2011 for €3.7 billion. 

  • Fendi
    This brand is famous for making luxury fur and leather products, like coats, shoes, fragrances, and eyewear, and it was acquired for an estimated $259.4 million in 2001. 

  • Christian Dior
    Once failing and on the verge of shutting down, Dior is known for its designer clothing range. It was one of the firsts in the list of acquisitions of Arnault. He acquired it in 1984 for a symbolic price of 1 Franc. LVMH technically acquired this brand in 2017 though, for 13.1 billion. 

  • Sephora
    With roughly 15000 different products on their portfolio, this luxury personal care and beauty products brand was acquired in 1997 for a price that is not known to the general public. 

The Bottom Line

Well, we all have heard, “keep your friends close and your enemies closer”. Bernard was both in this story. Bernard Arnault became the chairman and CEO of this mega-brand in 1989 and has been intact in the position since then. The Louis Vuitton story wouldn’t be a world’s fav if Bernard wasn’t in it. He helped the brand achieve the heights it is in today. 

Every once in a while, there comes a person who sabotages everything just to rebuild it from scratch.

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Rishika Mukherjee

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Mukherjee is an avid reader and loves to write as much as read. She is the youngest of all but handles chores like a 50-year-old woman. She takes a lot on her plate and somehow, eerily manages to get the job done. As Hazel Grace stated, she could read a good author's grocery list, and so would Miss Mukherjee. 

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