Luxury giant LVMH is making a push to gain share of the global luxury watch business, with a newly launched watch division and a range of new, higher-priced models.
Global luxury watch sales are estimated at around $30 billion this year, according to market research firm IMARC Group. They are expected to grow to more than $37 billion by 2032 as global wealth increases and Generation Z and millennials become more interested in high-tech mechanical watches.
LVMH’s jewelry and watches division posted sales of $11.8 billion in 2023, representing 7% organic growth. The luxury giant now has 10 watch brands, including TAG Heuer, Hublot and Zenith, along with fashion and jewelery brands such as Louis Vuitton, Bulgari and Dior that also make watches.
Last month, the company named Frederic Arnault, the 29-year-old son of LVMH Chairman and CEO Bernard Arnault, CEO of LVMH Watches, which includes the TAG Heuer, Hublot and Zenith brands.
Analysts estimate that sales of these three brands reached about $2 billion last year.
A luxury Zenith watch at the 2024 Watch Week in Miami.
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Frederic Arnault, who introduced a number of highly popular new models at TAG Heuer, is expected to focus on innovation, cutting-edge materials and creative designs at the brand’s largest team. Analysts say LVMH may also continue to acquire attractive brands if they become available.
In interviews with CNBC during LVMH’s Watch Week in Miami, the brands’ CEOs said 2024 is already shaping up to be stronger than 2023, when rising interest rates and recession fears dampen demand. Executives say they are particularly encouraged by the resilience of the American luxury consumer.
“Everything is about cycles, and the beauty of America is that the cycles are very short,” said Benoit de Clerck, CEO of Zenith. “We go through ups and downs and all that, but I can assure you that today Zenith is definitely on an upward trajectory with good traction in the US markets.”
Zenith luxury watches at 2024 Watch Week in Miami.
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Watch sales follow a similar pattern to the broader luxury market, where wealthier consumers remain stronger. Executives say the wealthy are less affected by rising interest rates and economic uncertainty, so more and more brands are catering to “super-consumers” and VIP collectors who continue to spend for the highest quality and craftsmanship.
“The high level has really been one of the main drivers of our growth,” said Jean-Christophe Babin, CEO of Bulgari. “I think the wealthy more than ever are willing to invest in authentic, trusted and timeless brands.”
Babin said he sees rising strength at the highest levels across 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 of Bulgari’s coveted yellow-gold Serpenti Secret watches that retail for $350,000.
A secret Bulgari Serpenti watch at 2024 Watch Week in Miami.
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LVMH is also targeting the fastest growing segment of luxury watches: women’s watches. While women’s watches only account for about a third of total sales, women’s interest in luxury mechanical watches has been spurred by more exposure on social media and a growing number of models designed for women. The growing global population of wealthy women—both self-made and inherited—is also fueling sales growth.
“The trend is towards more and more feminine and unisex watches,” said Babin. “Women are increasingly empowered, in terms of independence, autonomy and purchasing power. We believe this will continue.”
Reinvention
In the highly competitive world of luxury watches, brands must constantly innovate with materials, complications and designs to gain share and keep collectors engaged.
The Carrera Plasma Diamant d’Avant-Garde Chronograph Tourbillon at Watch Week 2024 in Miami.
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TAG Heuer, which has its roots in motor racing, achieved huge success with its Carrera Plasma, using lab-grown diamonds. The Carrera Plasma Diamant d’Avant-Garde Chronograph Tourbillon is priced at over $500,000 — and has a waiting list of over two years.
TAG Heuer also unveiled a teal Carrera Glassbox Chronograph with a teal dial, a reference to a shade of green used in motor racing in the 1920s and 1930s.
A luxury TAG Heuer watch at Watch Week 2024 in Miami.
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TAG Heuer CEO Julien Tornare said LVMH’s advantage over other watch brands and groups is its relentless focus on reinvention and desire.
“The Swiss watch industry has been quite conservative to some extent,” he said. “But at LVMH, they push us to try new things, to move forward. I think if we want to still be attractive [a] new generation, it is very important to show that we will work for the future and not for the past”.
Many of the LVMH brands mine their historical past for new designs and models.
Zenith released the Chronomaster Triple Calendar, a triple calendar chronograph on the moon, inspired by the rare original El Primero watch from 1970. The company also launched a new Chronomaster Sport in green, the hottest color for luxury watches in recent years.
A luxury Zenith watch at the 2024 Watch Week in Miami.
CNBC
De Clerck said part of Zenith’s appeal to younger watch buyers and collectors is its price. While Zenith sells very complicated watches, it tries to offer value, such as the Triple Calendar that sells for about $14,000 but could probably cost “thousands more” based on the level of craftsmanship and complications required, he said.
“We have a very good proposition in terms of price against the competition,” he said. “You have a lot of watch for the money, and we want to stay and keep that spirit.”
At the same time, many LVMH brands are moving up the price scale, with more expensive, limited editions. Hublot, known for its bold, big timepieces, has just released a $250,000 limited edition timepiece called the MP-10 Tourbillon Weight Energy System. Only 50 of the futuristic watches will be produced and are expected to sell out quickly.
“We call it the art of fusion in watchmaking,” said Hublot CEO Ricardo Guadalupe. “We connect watchmaking tradition of more than 400 years, with innovation. We do this through design, through materials, new mechanics and new ways of creating movements.”
— CNBC’s Crystal Lau contributed to this report.