LVMH aims to capture the $30 billion watch market with innovative, upscale timepieces.

• LVMH is expanding its presence in the global luxury watch market through the establishment of a new watch division and the launch of premium timepieces.
• The demand for luxury watches is predicted to rise due to the increase in global wealth and the growing interest of Generation Z and millennials in high-end mechanical timepieces.
• The luxury conglomerate now owns 10 watch and jewelry brands, including TAG Heuer, Hublot, Zenith, Louis Vuitton, Bulgari, and Dior.

The luxury giant is expanding its presence in the global luxury watch market by launching a new watch division and introducing a line of high-end timepieces.

The global luxury watch market is predicted to reach $37 billion by 2032, with an estimated $30 billion in sales this year, according to IMARC Group. This growth is attributed to the increase in global wealth and the rising interest of Generation Z and millennials in high-end mechanical watches.

In 2023, LVMH's jewelry and watch division reported sales of $11.8 billion, representing a 7% increase in organic growth. The luxury conglomerate now owns 10 watch brands, including TAG Heuer, Hublot, and Zenith, as well as fashion and jewelry brands such as Louis Vuitton, Bulgari, and Dior that also produce watches.

The CEO of LVMH Watches, which includes the TAG Heuer, Hublot and Zenith brands, is Frederic Arnault, the 29-year-old son of LVMH Chairman and CEO Bernard Arnault.

Last year, approximately $2 billion in sales were estimated for the three brands.

Frederic Arnault, who introduced several successful new models at TAG Heuer, is predicted to bring his emphasis on innovation, advanced materials, and unique designs to the larger brand. It is speculated that LVMH may also acquire more appealing brands if they become available.

During LVMH's Watch Week in Miami, executives stated that 2024 is expected to have stronger demand than 2023, despite rising interest rates and recession fears. They are particularly optimistic about the resilience of the American luxury consumer.

Benoit de Clerck, CEO of Zenith, stated that the key to success in America is through cycles, and that the beauty of the country lies in its short cycles. Despite going through ups and downs, Zenith is currently experiencing an upswing with good traction in the U.S. markets.

The luxury market is experiencing a similar sales pattern, with the wealthiest consumers remaining the strongest. Executives claim that the wealthy are less impacted by rising rates and economic uncertainty, leading to an increase in brands catering to "super-spenders" and VIP collectors who continue to invest in high-quality and craftsmanship.

Our growth has been significantly influenced by the high-end market, as stated by Jean-Christophe Babin, CEO of Bulgari. He believes that the wealthy are increasingly interested in investing in authentic, reputable, and timeless brands.

According to Babin, there is a noticeable increase in strength at the high end across Bulgari's diverse businesses, which encompass hotels, fashion, and fragrances.

Babin boasted about selling more high-end jewelry, watches, and bags, as he displayed a $350,000 yellow-gold Bulgari Serpenti Secret watch.

LVMH is targeting the fastest-growing segment of luxury watches, which is women's watches. Although women's watches account for only a third of total sales, their interest in luxury mechanical watches has increased due to more exposure on social media and a growing number of models designed for women. The rising global population of wealthy women, both self-made and inherited, is also driving sales growth in this segment.

Babin stated that the trend is shifting towards more feminine and unisex watches as women gain more power, autonomy, and purchasing power. This trend is expected to continue.

Reinvention

To remain competitive in the luxury watch industry, brands must continuously innovate in terms of materials, complications, and designs in order to attract collectors and maintain their interest.

The Carrera Plasma Diamant d’Avant-Garde Chronograph Tourbillon by TAG Heuer, a brand with origins in car racing, is a highly sought-after timepiece priced at over $500,000. With a waitlist exceeding two years, this luxurious timepiece is a testament to the brand's commitment to innovation and craftsmanship.

TAG Heuer introduced a Carrera Glassbox Chronograph with a teal-green dial, drawing inspiration from the shade of green used in auto racing during the 1920s and 1930s.

Julien Tornare, CEO of TAG Heuer, stated that LVMH's edge over other watch brands and groups is its unwavering commitment to innovation and allure.

Although the Swiss watchmaking industry tends to be more traditional, LVMH encourages innovation and progress. I believe that in order to attract a younger audience, it is crucial to demonstrate a commitment to the future rather than the past.

LVMH brands are drawing inspiration from their rich histories to create innovative designs and models.

Zenith unveiled its Chronomaster Triple Calendar, a triple calendar moonphase chronograph that draws inspiration from its iconic El Primero watch from 1970. Additionally, the brand introduced a new Chronomaster Sport in green, a popular color among luxury watch enthusiasts.

According to De Clerck, one of Zenith's attractions to younger watch buyers and collectors is its affordability. Although Zenith produces intricate watches, it aims to provide value, such as the Triple Calendar, which costs approximately $14,000 but could potentially be priced "thousands more" based on the level of craftsmanship and complexity involved.

He stated that our proposition is excellent in terms of cost compared to our competitors. We offer a lot of value for the price, and we intend to maintain that approach.

Limited edition watches are becoming more expensive, and Hublot has just released a $250,000 watch, the MP-10 Tourbillon Weight Energy System. Only 50 of these futuristic watches will be produced, and they are expected to sell out quickly.

Fusing tradition with innovation is our approach to watchmaking," stated Hublot CEO Ricardo Guadalupe. "We achieve this by blending design, materials, mechanics, and manufacturing techniques.

— CNBC’s Crystal Lau contributed to this report.