Louis Vuitton Möet Hennessy (LVMH) led by Bernard Arnault and the Pinault-Printemps-Redoute, renamed Kering and led by François-Henri Pinault, are the two French Groups that dominate the luxury sector. Both own strong brands, but they have different histories and different business models.
But which one has the better positioning?
Concerning the financial situation, LVMH Group boasts in 2016 a growth of 5.43% (from 35.66bn to 37.60bn) and its net income improved of 11.42% (from 3.57bn to 3.98bn). On the opposite, Kering revenues grew of 6.91% (from 11.58bn to 12.38bn), while the net income improved of 16.88% (from 696.00m to 813.50m). It’s clear that LVMH has a stronger financial situation also thanks to its domination in two unrelated categories: leather goods and wines & spirits. The Group is also building up a dominant position in beauty retailing, primarily through Sephora and travel retailer DFS, exploiting rich synergies with its perfumes and cosmetics business. In addition, according to Forbes, Louis Vuitton is the 19th world’s most valuable brand with 27.3$ brand value and none of Kering’s brands are present in this ranking.
For the communication side, LVMH is most known with 235.100 likes on Facebook compared to 36.876 likes of Kering. This gap exists also between their main brands: Louis Vuitton, Christian Dior and Sephora have around 50 million followers; on the other hand Gucci, Bottega Veneta and Saint Laurent followers are around 20 million. To improve its image LVMH became one of the official partners of Cannes Film Festival in 2014. The Group also renovate some historical monuments e.g. the Versailles Palace and it supports forty-five worldwide art expositions.
These actions – mixed to the support of celebrities like Léa Seydoux (for Louis Vuitton), Charlize Theron, Johnny Depp and Natalie Portman (all of them for Dior) – glorify LVMH brand equity. This approach is less used by Kering that focuses on less known celebrities. The few exceptions are Charlotte Casiraghi and Gal Gadot for Gucci and Cara Delevingne for Saint Laurent.
With reference to the diversification, LVMH owns seventy brands in different sectors – spirits & wine, fashion & leather goods, beauty & cosmetics, hotels, boating… – but its diversification go beyond the “usual” sectors. Indeed, it is also the owner of some magazines such as Les Echos, Connaissance des arts, Nowness and a radio channel as Radio Classique. On the other side, Kering decided to act in a different way, it wants to differentiate its brand portfolio enlarging its activity on sport & lifestyle, that’s why it acquired Puma, Volcom and Cobra: a quite strange decision for a luxury Group.
To conclude, LVMH is – at the moment – the most valuable and better diversified Group. The Kering strategy, above all in terms of diversification, appears ambiguous and quite incoherent for a luxury Group, but in the long term these decisions will possibly lead the French giant to a better positioning compared to LVMH Group.