This article is the part (2) of our series “Know your watch conglomerates” :
Conglomerate no. 2: The Richemont Group
Prestige & Luxury Range: Vacheron Constantin, Jaeger-LeCoultre, Lange & Söhne, IWC, Piaget, Van Cleef & Arpels, Montblanc, Roger Dubuis, Cartier, Baume & Mercier, Officine Panerai, & Ralph Lauren Watches (Joint Venture)
The website does not exaggerate when it says that Richemont owns several of the world’s leading companies in the field of luxury goods, with particular strengths in jewellery, luxury watches and writing instruments. The South African owned conglomerate has a significant stake in a veritable quiverful of high-end brands, including Saxony master watchmakers A. Lange & Sohne, the longest established Swiss watch brand Vacheron Constantin, one of the most exciting new high end watchmakers on the block, Roger Dubuis, the exalted Italian/Swiss brand Panerai, and long established stalwarts of the Swiss watch industry such as Baume & Mercier, and IWC.
As if that formidable list is not enough, Richemont also have interests in high-end jewellers and watchmakers too such as Piaget, Cartier, Van Cleef & Arpels, and more besides. Their steady acquisition of brands has made the third largest luxury goods conglomerate in the world behind the Swatch Group, and LVMH (Louis Vuitton Moet Hennessy).
Richemont was created by successful businessman Johann Rupert in 1988 by the spin-off of the international assets owned by Rembrandt Group Limited of South Africa (now known as Remgro Limited). It was originally established by Johann Rupert’s father Dr Anton Rupert in the 1940s, the Rembrandt Group owned significant interests in the tobacco, financial services, wines and spirits, gold and diamond mining industries as well as the luxury goods investments that, along with the investment in Rothmans International, would eventually form Richemont.
Underpinning at least some of the company’s success is the current enfant terrible of the consumer products world, tobacco products. The conglomerates intersts in tobacco have been hived off into a separate holding company, but the fact is, Richemont continue to hold an approximate 18% stake in British American Tobacco. Even though stringent anti-smoking directives have swept across Western countries and much of the Far East, selling tobacco is still hugely profitable and there are still new markets to be exploited.
However, increasingly these days, Richemont is more intent on the pursuit of luxury. In fact Richemont rakes in more than three quarters of its sales from its jewellery and watch divisions, but is also present in the fashion and leather-goods sectors with brands such as Alfred Dunhill, Azzedine Alaia and Lancel and Chloe.
One of Richemont’s key markets is China, where consumers not only consume vast quantities of cigarettes, but also acquire and treasure prodigious amounts of luxury goods, and increasingly, they are travelling overseas to buy them. The appetite for luxury goods, particularly watches and jewellery in China is likely to remain insatiable. In 2012, 60% of luxury watches purchased by wealthy Chinese were made not in China but overseas, where the selection is thought to be considerably better.
According to the World Luxury Association, customers from the Chinese mainland spent up to US$7.2 billion on luxury goods abroad during this time last year (Chinese New Year) with Europe their top destination.
China’s spending on Swiss watches on a gross domestic product per capita basis is about six times that of the U.S. and almost double that of France partly because of gift-giving. It’s no wonder Richemont has earnestly beaten a luxury path to China’s door. (richemont.com)
Next week: Conglomerate no 3 : LVMH