Bernard Arnault, boss and majority shareholder of LVMH, is said to have taken a “private” stake in rival Richemont, according to this Bloomberg article. Naturally, when you know Mr. Arnault’s background, you know that no investment or shareholding is ever made by chance. Although both groups have refrained from comment, the mere news of this acquisition has sent Richemont’s share price up 2.6%.

We could take this information to be a false rumor, imagining that the Arnault family is diversifying its private investments, or we could imagine that LVMH is swiftly moving to further develop its position in a jewelry market that is growing strongly thanks to the hold of a few dominant brands such as Cartier.

Jewelry still has tremendous potential for consolidation, unlike the watchmaking industry, where a few strong brands already hold a preponderant share of the market. Just five brands represent 53% of the entire industry. And while showing extremely strong potential in many areas, there is still a way to go for LVMH and its top jewelry houses Bvlgari and Tiffany & Co., along with Chaumet, to catch up to its rivals which include such maisons as Cartier and Van Cleef & Arpels. Indeed, Tiffany & Co. as well remains in the midst redefining its full potential, following the acquisition by LVMH in 2021.

Logically, the integration of Cartier and Van Cleef & Arpels would greatly help LVMH to develop its strategy of conquering the branded jewelry market. But it would also provide a strong growth driver for its watch division, which currently stands at about 5.8% of total market share with Bvlgari, TAG Heuer, Hublot and Zenith.

On the other hand, Cartier is number two in the Swiss watchmaking industry according to the annual rankings drawn up by Morgan Stanley x Luxeconsult, with estimated sales of CHF 3.1 billion for 2023. It is also the brand with the most iconic watch (notably the Santos launched in 1904) and jewelry products still in the brand’s catalog.

Not to mention Richemont’s other watch brands, including Vacheron Constantin, which last year joined the club of billionaire watch brands for the first time (~CHF 1.1 bn sales in 2023 according to Morgan Stanley).

The addition of the Richemont Group’s brand portfolio to that of LVMH would enable the latter to quadruple its market share to ~25%, putting it well ahead of Swatch Group. Overall, it would allow the Watches and Jewellery business unit of LVMH to grow substantially from its current ~13% of the group’s total sales to ~33%, based on 2023 published figures.

At the same time, it would give LVMH access to a formidable industrial tool acquired and developed by Richemont over the last 25 years.

Additionally, it would enable a quantum leap with the integration of two iconic fine jewelry brands, Cartier and Van Cleef & Arpels, catapulting LVMH’s watch & jewelry division to a whole new level.

The latest news which was announced yesterday only reinforces the likelihood of LVMH’s rise to power in the watchmaking arena with the acquisition of SWIZA, owner of L’Epée 1839, maker of mechanical watchmaking marvels.