LVMH: How to Establish the Most Valuable Company in Europe

26 March 2021 / by Michael Lozina in Luxury Apparel
LVMH: How to Establish the Most Valuable Company in Europe

LVMH MoëtHennessy Louis Vuitton has recently been declared the most valuable brand in Europe. In February, the brand acquired Jay-Z’s Armand de Brignac and German footwear brand Birkenstock pushing their market capitalisation to €265 billion ($409 billion AUD). This means that LVMH has overtaken Nestle priced at €242 billion ($374 billion AUD). That’s no small feat given that Nestle is the largest food and beverage company in the world! It isn’t quite at, say, Apple’s level, but LVMH are ranked 21st globally. This doesn’t happen by mere accident or chance, so how do you become one of the most valuable companies in the world?

To find out this undertaking has been a mammoth task that can’t reasonably be fit into one article. So, this will be the first in a series focusing on the forming of LVMH and how each Louis Vuitton, Moët &Chandon, and Hennessy were first established, grew and finally merged into the luxury goods giant that is, LVMH.

Louis Vuitton, Establishment Through Ambition

There Must be Something More

Frenchman Louis Vuitton had a sad start in life. In 1831, at age 10, both of Louis Vuitton’s parents had died. He was adopted and looked after but life wasn’t the same for Louis. His mother was a hat-maker, and his father was a carpenter. His new family weren’t handy, nor did they really create much of anything. The young Louis felt that something was missing in his life and set out to find what that was.

1835 saw the young boy leave his home of Anchay for the cultural capital of France, Paris. With no money to his name, Louis could not hire a cart, carriage, or even a horse. This presented a problem. The distance from Anchay to Paris is approximately 292 miles (470 km). Not letting a little thing like distance get in his wayVuitton decided to walk to Paris in pursuit of fulfilment. He took odd jobs on histwo-year trip to Paris in order to survivebut the young boy made it.

Louis Vuitton, It’s about Respect

Once he had finally reached Paris in 1837,he became an apprentice trunk-maker and packerunder Monsieur Marechal.During his apprenticeship, Vuitton found himself packing the trunks of very wealthy women. One of these women was the Empress of France, Eugenie de Montijo. She held Marechal, and by extension, Vuitton, in high regard for their abilities which led them to meet many other wealthy women and increase their clientele. Vuitton also heard their complaints, their wants, and their needs when it came to their luggage. Vuitton started getting ideas.

i. Louis Vuitton

After 10 years of apprenticeship, Vuitton had become an expert trunk-maker and packer. By1854, Vuitton finally had made enough money to open his own business in an ideal district very close to the couture houses in Place Vendome. The influence of the couture houses nearby gave Louis both ideas and a need to prove himself. He wanted to compete with them, he wanted to be better, he wanted respect.

Vuitton did slowly earn the respect of the couture houses but in 1858, Vuitton made a breakthrough. He had invented a new kind of trunk. The idea seems simple now, but back thenit was exciting. Vuitton’s trunks were rectangular in shape with flat tops and were made from trianon canvas making them lightweight, durable, and airtight. Before this, trunks had rounded tops to promote water run-off, but as a result prevented them being stacked effectively.

Vuitton’s invention promoted him tothe status of a master luggage-maker and the Louis Vuitton brand was firmly established as one associated with quality, excellence, and elegance.

ii. An early Louis Vuitton trunk | The Jewellery Editor

The Best Wine in France: Beginnings of the Moët Legacy

With Great Risk Comes Great Reward

Before it was a given, Claude Moëtimagined that the region around Champagne, just east of Paris, might be a good place to make wine. Champagne was not known for its wine at the time so this was far riskier than one might think.But Moët persisted and like all good businessmen, took a calculated risk.

iii. Credit: Encyclopaedia Britannica

In 1743he established Moët et Cie.The vineyard was located at Épernay and production was going well. But those damn distributors.Moët found his distributors unreliable and instead of continuing to work with them, he bought one of their offices and decided to marketthe wine himself.

Moët at the time focused all his trade on Paris. King Louis XV’s court were big fans of sparkling wine.This was a very recent trend. Before the 18th century, sparkling wine was considered a fault in most wine, a result of poor production. This wasn’t due to reasons of taste but rather of practicality.

iv. Claude Moët | Credit: Tony Aspler

Many winemakers of the past were asked to rid the wineof bubbles as the pressure would often make the bottles burst in the cellar. However, the 18th century saw a new discovery in glass production that couldcreate bottles that were much stronger and durable. Still, it was a risk. If one bottle burst, it could often cause a chain reaction that would make the other bottles burst. It was often routine for a cellar to lose anywhere from 20% to 90% of their bottles to inferior and unstable wine.

Timing is Everything

Part of Moët’s success was due to his fantastic timing. As stated,tastes were favouring sparkling wine and now the technology was there to reduce the chance of exploding bottles. But it was Moët’s ability to make stable, quality wine consistently over time that led to his success.

The Moët house was firmly established when their wine became a favourite among the gentry and nobility. The key to their early success was in 1750. King Louis XV’s mistress, Marquise de Pompadour, was a highly influential tastemaker. So if she said she loved something it was likely to be the next big thing. The next big thing was Moët et

vi. King Louis XV
v. Marquise de Pompadour | Credit: Daily Dose of Art

Cie. Pompadour declared that, ‘Champagne is the only wine in the world that makes every woman beautiful.’

With this kind of praise and backing there was nowhere this could go but up. Claude Moët died in 1792 and it was up to his grandson, Jean-Remy Moët to keep his grandfather’s already prestigious legacy alive.

A Soldier Turned Businessman: The Creation of Hennessy

Forged in War

The establishment of Hennessy begins 74 years before it even existed, before Richard Hennessy was even born. In 1691, the Treaty of Limerick was agreed to by Irish General Patrick Sarsfield and the English. The terms demanded that in order to end the war, the Irish Army were to leave Ireland and fight for the French Army, then allies of England. Those that enlistedcould keep their lands and avoid prosecution. However, once the army had left Ireland the English ignored the Treaty of Limerick and instead introduced the Penal Laws which stripped many Irish Catholics of their lands.

vii. Richard Hennessy | Credit: LVMH

As a result, for the next 100 years, the French Army had an Irish Brigade that saw many Irishman signing up to pursue a military career. Richard Hennessy was one of those Irishmen. He was a Catholic from a prominent family, but his prospects were limited if he had stayed in Ireland. In 1743, at age 19, Hennessy left for France and joined the Clare Regiment of the Irish Brigade in King Louis XV’s French Army as an officer.

An Epiphany

During the Battle of Fontenoy in 1745, Richard Hennessy had suffered severe injuries and decided to leave the army. As he wandered France,Hennessy became familiar with the Charente region. Charente was a prosperous region due to traditional industries of salt and cognac production. Hennessy had thought to use the money he earned in the military to invest in cognac production from afar. Unfortunately, this wasn’t very successful.

viii. The Charente region | Credit: Encyclopaedia Britannica

Hennessy had to re-evaluate.In 1757, Richard went with his cousin, James Hennessy, to business school at Ostend in Flanders. Feeling confident with what they had learnt, Richard went back to France in 1765. This time he was so confident in his success he brought his family with him to Charente. With a few bank loans, he and his friends Connelly and Arthur started trading cognac from Hennessy’s house.

The 1760s were a boom period for the alcohol trade in general and Hennessy benefited from it. The French loved it. The British Empire showed great interest. In his homeland of Ireland, spirits from Continental Europe were very popular as the import taxes were much lower than those from Great Britain.

So, Hennessy did what he thought right and began shipping his product from France to London, Dublin, and Flanders. Even so, Hennessy was just another brandy house in a sea of many. The 1770s saw limited growth for the brand but it did highlight Hennessy’s potential. One fan of Hennessy was the Prince of Soubise who recommended the drink to whoever he could.

Business still wasn’t booming. Hennessy moved the brandy house to Bordeaux where he knew an alderman named George Boyd. Boyd gave Hennessy the connections required to push his brand over the brink.One of these connections was the older, established family the Martells. The Hennessy’s had a marriage with the Martell’s, Richard’s son marrying the Martells’ daughter. The Martellsafterwards endorsed Hennessy to the point that people had to wonder what it was. The French Revolution (1789) was also kind to Hennessy, as the brandy house managed to avoid being a target of revolutionaries. After decades of trying, Hennessy’s hard work was finally paying off.

That’s All For Now

This story has far more to it than can be reasonably fit in one article. We still have hundreds of years until we get to the merger in 1987 that created LVMH as we know it today! There will be more so make sure to check out Ten Pieces of Eight for the next instalment in the series!

1 Comment

  • Casey Matthews / 29 March 2021

    Amazing! What a fantastic read! Very excited to read the rest of the articles

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