The future of the watch industry is sure to be in the hands of the Arnault brothers! LVMH's new watch division is a source of exciting news

On January 5th, amidst the tragic news of the 2024 Noto Peninsula earthquake that occurred on New Year's Day, and the collision and fire of a Japan Airlines passenger plane and a Japan Coast Guard aircraft at Haneda Airport on the 2nd, a top official from the LVMH Group, which aims to "open up the future of the watch industry," arrived from Switzerland. This time, we bring you some positive news.

Frédéric Arnault, third son of Chairman Bernard Arnault, will head LVMH's watch division.

　On January 5, 2024, TAG Heuer announced a change in its CEO. Frédéric Arnault, the third son of Bernard Arnault, Chairman and CEO of LVMH Moët Hennessy Louis Vuitton SE, who assumed the position in 2020, will step down and be replaced by Julien Tornare, CEO of Zenith. Furthermore, Frédéric Arnault will assume the role of head of the LVMH Group's watch division, which oversees the three watch brands Hublot, Zenith, and TAG Heuer.

　At just 29 years old, Frederic has become the number two man in the LVMH Watch & Jewelry division, behind Stephane Bianchi, and is now solely responsible for overseeing the watch brand, a position similar to that held by Jean-Claude Biver.

　There was a rumor circulating in the watch industry that Frederick would move from CEO of the watch-only brand TAG Heuer to CEO of the jewelry and watch maison Bulgari in the spring of 2023. However, this turned out to be a false report.

　Even so, there is no other top management in the watch industry who has such financial resources and ability, and is so young. After all, Frederick is not just the successor to one watch brand, but one of the successors to the world's number one luxury brand group.

　Since around 2015, the watch industry has seen a generational change from charismatic, older managers who have been driving the "revival of mechanical watches → luxury watch boom" that began in the 1990s to younger managers. However, the lack of successors makes it increasingly difficult for the owners' families to continue their businesses. Many managers are "employed," and job hopping (advancing their careers by changing jobs) is commonplace. However, this frequent change in top management is a major drawback for the watch business, which requires long-term management strategies.

A long-term, unwavering management strategy possible only because it is a family business

　And luxury watches are no longer just "tools for telling time," but luxury fashion items. However, their production requires advanced equipment and skilled personnel. This requires management with a long-term perspective that is incomparable to other fashion items. Although advances in machining technology and IT have made it possible to make mid-range and lower-priced watches without relying on artisans as in the past, they are still precision machines. Furthermore, the production of more luxurious and expensive watches, such as jewellery watches and complicated watches, now requires a higher level of savoir-faire (artistic craftsmanship) than ever before.

　In the luxury watch business, pursuing short-term profits is sure to lead to failure. A long-term, unwavering management and investment strategy is absolutely necessary. In that sense, family-run businesses have an advantage. From the 1990s to the present, I have seen many watch brands fall from their top ranks as a result of the owner's investment failure or a sudden change in management due to acquisition by a luxury brand group.

　In this regard, no other watch conglomerate (a corporate alliance operating in a variety of businesses) has been able to achieve a more unwavering management and business strategy than the watch business of the LVMH Group, led by Bernard Arnault.

LVMH Chairman and CEO Bernard Arnault places top priority on the watch and jewelry business!

　Moreover, I believe that Bernard Arnault, Chairman and CEO of the LVMH Group and father of Frédéric Arnault, has high hopes for the future of Watches & Jewelry among the five business categories of Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry, and Selective Retailing.

　Bernard Arnault, the group's leader, has five children, four sons and one daughter. All of them received the same or similarly rigorous education as their father, who graduated from École Polytechnique, the most elite school in France and the leading higher education and research institution among the Grandes Écoles. All of them hold positions at or near the top of the 75 fashion houses under the LVMH Group. The "imperial education" of these children has also become a hot topic. Among them, Bernard has also involved two of his five children, his third son, Frédéric Arnault, and his fourth son, Jean Arnault, in the watch business.

　Following his success at TAG Heuer, the third son, Frédéric, will now lead three dedicated watch brands under the LVMH Group. In addition, the fourth son, Jean Arnault, has also demonstrated his extraordinary skills as Marketing and Product Development Director of Louis Vuitton's Watch Division since August 2021. Together with legendary watchmaker Michel Navas, who heads La Fabrique du Temps Louis Vuitton, the watchmaking atelier responsible for the production and development of Louis Vuitton's complicated watches, he has developed and released a succession of cutting-edge mechanical watches, including complicated watches and the new Tambour luxury sports watch.

　He also launched a project to revive the Gérald Genta and Daniel Roth brands, and established the Louis Vuitton Watch Prize for Independent Creatives, an award that supports top independent watchmakers in the watch industry with the aim of innovating in watchmaking.

　In fact, as I learned during a direct interview, Jean-Jean Arnault, now 25, is undoubtedly the biggest watch enthusiast in the Arnault family. As a child, the first watch that caught his interest was a Daniel Roth automaton watch he saw at a Bulgari boutique in Paris with his father.

　Jiang holds a master's degree in mathematical finance from the Massachusetts Institute of Technology (MIT) in the United States, but he is also a die-hard machine enthusiast, having previously studied mechanical engineering at the graduate school of Imperial College London.

　Of his five children, their father, Bernard, who heads the LVMH Group, has the highest hopes for Frédéric and Jean. According to LVMH's 2022 investor presentation, the group's watch and jewelry business accounts for approximately 10% of net profit. The reason they are involved in the watch business is likely because the group believes that the highly profitable watch and jewelry business, and in particular the watch business, is the most important business that will determine the future of the group.

The future of the watch industry lies with brothers Frédéric and Jean!

　This is just my personal speculation, but I have no doubt that in the very near future, the third son, Frédéric Arnault, and the fourth son, Jean Arnault, will oversee and lead the LVMH Group's watch and jewelry business, which could very well become a force to be reckoned with, surpassing the Richemont Group, the Swatch Group, and Rolex.

　Furthermore, all watch enthusiasts reading this column should keep an eye on the fourth son, Jean Arnault, who is a watch enthusiast, and the watch brand he is involved with. Absolutely.