Diversification into luxury goods

1. Diversification into luxury goods

2. Agenda • Luxury Industry • Moet Hennessy Louis Vuitton - LVMH • SWOT • Competitor Analysis • Short& long Recommendations

3. Luxury Goods Industry What is Luxury? Luxury Goods Industry – History Luxury Goods Industry – Current

4. What is Luxury?

5. Definitions… If everyone owns a particular brand… by definition it is not luxury Luxury is associated with high price, or high quality Luxury is about the quantity of expensive goods Luxury is derived from unique craftsmanship & technical superiority Luxury is to project certain social status or wealth Luxury is to satisfy an emotional desire for subjective intangible products

6. Luxury Goods Industry - History • 18th Century – viewed as the beginning of luxury history in Europe • For centuries, luxury goods industry which has been controlled by the family business provides services to the most affluent sectors of society • In recent years, for the wave of acquisitions, most of these family-run enterprises were merged by the Commercial giant

7. Luxury Goods Industry – Global • Before the 1990s Global luxury industry kept 10% -20% of the unconventional speed development, and created a 250 billion US dollars on the global market • 2000, the industry began to turn constantly troughs period • Since 2000, the global luxury goods market in a state of contraction • 2004 luxury industry profit has declined 35.7%. • 2006 Global sales of luxury goods rose 10 percent to a record 150 billion

8. Luxury Goods Industry - Current • Consumer consumption rates – based on global market share

9. The Group is active in 5 Sectors • Perfumes & Cosmetics • Watches& Jewelry • Fashion& • Leather • Goods • Selective retailing • Wine & Spirits

10. 1743

11. 1743 1854

12. 1743 1854 1860

13. 1743 1854 1860 1947

14. 1743 1854 1860 1947 1961

15. Bernard Arnault + 1987= + LLV MH

16. >64,000 employees = 6 =+ >1,700 stores worldwide +TODAY > 60 Prestigious brand = + >$ 17 billion US Revenue =+

17. + Future =?

18. Swot Analysis

19. Strength • -Powerful and prestigious brand portfolio • -World renowned • -Powerful distribution capabilities • -New product launches • Wines and spirits Moët & Chandon; Hennessy; Louis Vuitton, Kenzo, Givenchy, Fend Christian Dior, Guerlain, Parfums Givenchy Dior, Fred, Omas, TAG Heuer DFS Galleria, Miami Cruiseline Services, Sephora, Le Bon Marché

20. Weaknesses • -Selective Retailing division continued poor performance • -Higher exposure to US Dollar than its peers • -Weak sales performance

21. Opportunities • -A change in investor’s perception • -Expansion into new countries • -Product diversification • -Advertising impact

22. Threats • -Champagne production • -Price deflation • -Economic cycle • -Imitators

23. Swot Analysis

24. Strength • -Powerful and prestigious brand portfolio • -World renowned • -Powerful distribution capabilities • -New product launches • Wines and spirits Moët & Chandon; Hennessy; Louis Vuitton, Kenzo, Givenchy, Fend Christian Dior, Guerlain, Parfums Givenchy Dior, Fred, Omas, TAG Heuer DFS Galleria, Miami Cruiseline Services, Sephora, Le Bon Marché

25. Weaknesses • -Selective Retailing division continued poor performance • -Higher exposure to US Dollar than its peers • -Weak sales performance

26. Opportunities • -A change in investor’s perception • -Expansion into new countries • -Product diversification • -Advertising impact

27. Threats • -Champagne production • -Price deflation • -Economic cycle • -Imitators

28. Competitor • Remy Cointreau • PPR ( Pinault-Printermps-Redoute) • Prada • Richemont

29. Remy Cointreau • Founded: Merger of Remy Martin(1724) and Cointreau(1849), France, 1991 • Products: cognac, wines, rums, liqueurs, champagnes • Sales (mil.) in 2006: $963.9 • Net income (mil.) in 2006: $89.2 • Employees: 1346

30. Advantage • Customer loyalty • The decision to regain control of worldwide distribution • Increase brand awareness and market leadership

31. PPR(Pinault-Printemps-Redoute) • Founded: Francois Pinault, France, 1963 • Sales in 2006 ( mil. ): $23,656.2 • Net income in 2006 ( mil.) : $965.9 • One year net income growth : 42.2% • Employee in 2006 : 78,453

32. Gucci • Subsidiary of PPR • Founded: Goccio Gucci, Italy, 1921 • Products: cosmetics, shoes, perfumes, Leather fashions, watches

33. Advantage • Marketing strategy • Strategic deployment • Designer

34. Prada • Founded: Mario Prada, Italy, 1913 • Products: costumes, hand bags, suitcases, watches, perfumes • Company type: private

35. Advantage • Designer • Marketing strategy • Brand strategy

36. Richemont • Founded: Anton Rupert, Switzerland, 1988 • Products: jewelry, watches, leather goods, pens • Sales in 2006 ( mil.) : $ 5,201.9 • Net income in 2006 ( mil.) : $1,323.4 • Employee: 16,400

37. ShortRecommendation • Customer Service – providing better service to customers to keep them • Company growth – serving consumers (i.e. starbucks)

38. Long-termRecommendation • Piracy & counterfeit – competition between the real and fake products

39. Long-term Recommendation Focus On Potential Market (i.e. Asia Market)