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How did the Frenchman Bernard Arnault become richer than Elon Musk and Jeff Bezos?

2023-01-04 17:53:43Biznes SHKRUAR NGA TIMOTHY ROOKS
How did the Frenchman Bernard Arnault become richer than Elon Musk and Jeff
Bernard Arnault

French billionaire Bernard Arnault has built a massive and profitable luxury brand retail empire. Where does he come from and how did he become richer than Elon Musk and Jeff Bezos?

Elon Musk did not stay at the top of the list as the richest man in the world for long. Just over a year after reaching the top, he has been eclipsed by 73-year-old French billionaire Bernard Arnault. Forbes analysts estimated on December 20, 2022 that Arnault's fortune is worth $180.2 billion (€169.8 billion), which is nearly $17 billion more than Elon Musk's.

Arnault is co-founder, chairman and CEO of LVMH Moet Hennessy Louis Vuitton, commonly referred to as LVMH. In his company, he is its largest shareholder and has the majority of voting rights in the listed company.

This is not the first time that he tops the list of the richest people in the world. He briefly achieved this position in 2019, 2020 and again in 2021. If Musk can quickly turn Twitter into a profitable company, Arnault may not hold the title of the world's richest man for long. However, the achievements of the Frenchman are worth noting.

A luxury empire

LVMH is a conglomerate based in Paris, consisting of 75 distinct brands primarily in beverages, high-end fashion and cosmetics. In 2021 it had a revenue turnover of 64.2 billion euros ($68.2 billion), 20% more than in 2019. Fashion and leather goods accounted for 48% of revenue.

The company, the world's largest luxury goods firm, has over 175,000 employees and 5,500 stores. In November 2022, its market value was according to Statista's calculations about 371 billion euros, making it one of the most valuable companies in the world, ahead of Mastercard, Chevron and Nestle.

How did the Frenchman Bernard Arnault become richer than Elon Musk and Jeff
Views from Fashion Week 2021 in Milan

Compared to others on the world's richest list, Arnault is not well known outside of France. However, the subsidiaries of the LVMH company are quite popular and include many famous brands such as Bulgari, Dior, Fendi, Givenchy and of course Louis Vuitton. The company also owns Sephora cosmetics stores and other stores in Paris. The company's oldest brand is the Chateau d'Yquem winemaker, which was founded at the end of the 16th century.

In America, Arnault attracted attention when he bought the famous jeweler Tiffany & Co. for nearly 16 billion dollars in 2019. In Germany, he made headlines in early 2021 when he bought Birkenstock, although it is unclear how the maker of comfortable sandals can transform into a luxury brand.

Transforming Louis Vuitton bags into billions

Arnault was born in northern France near the Belgian border. After graduating from engineering school, he joined his father's construction company. There he focused on real estate development and soon became its president.

In 1984, he bought a bankrupt business that included the Christian Dior department store and Le Bon Marche. This was his "attack" on the luxury market. In 1987, LVMH was formed from the merger of Louis Vuitton and Moet Hennessy. He quickly overruled the others in an imposed takeover and in 1989 was named chairman of the executive board, a role he has held ever since.

How did the Frenchman Bernard Arnault become richer than Elon Musk and Jeff
In 1984 Arnault bought the bankrupt Christian Dior business

After becoming the sole boss, he continued for a decade to buy other companies one after the other with a rush of billions of euros. Many of the brands were poorly managed or outdated, so he brought in modern management and hired new designers to shake up the market.

Fashion critic Suzy Menkes called Arnault the "Lord of Brands" in a profile of him published in the International Herald Tribune in 1999. This article is still relevant today. "The company's goal is to be contemporary, modern, to make brands speak a universal language," she wrote. "And Arnault insists that maintaining the individuality and uniqueness of each brand is the primary concern within an effective corporate structure." This strategy has allowed each brand to maintain a degree of independence while becoming more professional.

The company continues to expand, particularly through growth in Asia, its largest market, followed by the United States and Europe. Her glossy ads are aspirational. Stores offer less expensive items like belts, hats and anything else with logos to attract new shoppers.

Just as important, Arnault believes in the power of the Internet. Everything was moving online, and so would LVMH without losing its exclusive aura. Now many of the brands have rich websites and online stores and are no longer afraid to openly display their prices.

Planning for the future

Today LVMH is a family business. All five of Arnault's children work with him in various capacities. Always impeccably dressed, Arnault has graying hair and is very reserved. Colleagues rarely talk about it. We know he is an avid tennis player and enjoys music and art collecting. For several years, he owned the Phillips de Pury auction house.

How did the Frenchman Bernard Arnault become richer than Elon Musk and Jeff
Opening ceremony of The Morozov Collection, Icons of Modern Art at the Louis Vuitton Foundation, Paris

In 2014, the Louis Vuitton Foundation opened in Paris. The Frank Gehry-designed contemporary art museum is home to Arnault's collection and is supposed to one day be handed over to the city. He has also donated millions to charity and the restoration of Notre Dame Cathedral.

How did the Frenchman Bernard Arnault become richer than Elon Musk and Jeff
The Louis Vuitton Foundation and the Museum of Contemporary Art in Paris

The big question now is: How will it proceed next? Which of his children will take over the company? Is one of them destined to be his successor, or will the company be split between them? And is the company still going? Chanel, Armani, Hermes and a number of other brands are still there. But Arnault is not alone. His tactic of bringing together family-run luxury brand businesses has inspired others like Richemont and Kering to do the same. They may be competitors, but Arnault created the luxury guide./ DW

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