According to the Forbes ranking, French billionaire Bernard Arnault is now thought to be the richest person in the world. Due to the sharp decline in the price of Tesla’s stock and LVMH’s great performance, he has surpassed Elon Musk, as reported by Forbes.
50% operating margin
Arnault’s net worth is estimated at $180 billion.
Arnault’s fortune is based on his stake in the French luxury conglomerate LVMH (Louis Vuitton Moët Hennessy, or, more often, Moët Hennessy Louis Vuitton).
It includes fashion, luxury bags and accessories, perfume and cosmetics, jewellery, and also wine and spirits.
Perfumes and cosmetics, including Guerlain, Acqua di Parma and the fashion brands’ perfume derivatives as well as many more, selling €6.7 bn.
They own a number of retail outlets like Sephora, La Grande Epicerie/Le Bon Marché, Starboard Cruise Services etc., with sales of €11.8 bn. And finally, wines and spirits, which are mainly champagne and cognac, sell €6 bn. They call their brands “houses”. (Numbers from 2021, according to the LVMH website.) The total turnover of the group was €64.2 billion in 2021. There’s also an “others” group of brands that includes several media, a yacht builder, hotels etc. ($1=€0.93, €1=$1.07) The most important part of the empire is Louis Vuitton, according to The Economist, accounts for €20 billion turnover, a third of the total, with an operating margin of almost 50%.
It’s an amount that makes shopping irrelevant.
What does it matter what a new suit or a car costs?
Even a super-luxury apartment in Paris of 600 m2 (6000 sqft) neighbouring the Eiffel Tower is not even pocket money, currently on the market for €40 million (and he doesn’t really need it, he already owns a house of 2000 m2/4000 sqft a stone’s throw away).
One of the world’s most expensive super-yachts is Abramovich’s the Eclipse, estimated by Architectural Digest to have a price tag of $1.5 bn – less than one per cent of Arnault’s net worth.
Or just under the market capitalisation of McDonald’s or Nike.
But we’re here for the wine.
Given the name of the group, LVMH, one might think that wine (M for Moët) and spirits (H for Hennessy) would make up a big part of the group, but that’s not the case.
But the group is still very dominant in each of the drinks markets.
The details are not always public, but there are various estimates.
Half of all cognac produced is actually sold in the USA.
In champagne, LVMH is not quite as dominant.
A couple of years back, the then newly appointed head of the LVMH drinks business, Philippe Schaus, told me that a rough estimate is that the group stood for a quarter of all champagne produced measured in volume, but a third of all champagne if measured in value.
The biggest champagne producer of all is Moët & Chandon, which is owned by LVMH.
It is estimated to make around 30 million bottles, which might be an underestimate.
But the second biggest champagne brand in the LVMH stable is Veuve Clicquot, famous for its orange-coloured label, with production estimated to be around 12 million bottles.
Curiously, their wine holdings are mainly outside of France.
Chandon makes sparkling wines on three different continents.
In France, they own some of the most famous estates, producing tiny quantities of very exclusive luxury wines, more luxury brands than wines actually: Château Cheval-Blanc and Château d’Yquem in Bordeaux, Clos des Lambrays in Burgundy and a few others.
Therefore, when you opened a champagne bottle from the list of names above for New Year’s or a celebration, you gave the world’s richest man money to keep him in the top rank. He’ll be grateful for it.
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