KING LOUIS REIGNS

For the seventh consecutive year, Louis Vuitton was named the most valuable luxury brand in the world – $25.9 billion – which poses the question: Just how did the French maker of logo-laden luggage go from a family business to the most coveted luxury brand in the world?  How did the famous LV logo become more valuable than Chanel’s interlocked Cs? The history of Louis Vuitton reads more like a Shakespearean drama than a family business made good: a wicked stepmother, Napoleon, a villainous – or vilified? – Gordon Gekko-like CEO, Marc Jacobs’ punkishly brilliant rebranding, and an uncanny understanding of the Far East.

by Kelly Lee

August 4, 1821:

It was a breezy but hot day in the mountainous countryside of Anchay, France, when Louis Vuitton came barreling into the world. Anchay, a sleepy hamlet in the Jura region of Eastern France, which resides along the Swiss border, produced a hardy stock. In order to survive the long, harsh snowy winters, the rural people of Jura made and sold detailed woodcrafts. Louis Vuitton’s father, Xavier Vuitton, was a farmer and his mother, Coronne Gaillard, was a milliner; Louis’ heritage was squarely working class. Vuitton’s mother’s influence—in years—would be brief, as Gaillard passed away when Louis was just 10 years old. His father remarried, and like a Grimm’s fairytale, a wicked stepmother emerged. Seeking refuge from his new stepmother and looking for more excitement and opportunity than Jura could provide, Vuitton, like many an artist and dreamer before him, set out for Paris. He was just 13 when his journey began. Two years, nearly 300 miles trekked by foot, and many an odd job later, Vuitton arrived in Paris in 1837, at the tail end of a nasty cholera epidemic that claimed over 20,000 lives, and the beginning of France’s industrial revolution. There, he apprenticed under Monsieur Marchal, a successful layetier, or box maker and packer. Box making was a highly regarded profession in Europe during the 1800s, as box-makers and packers were responsible for crafting custom luggage for Paris’ elite travelers. As this was the era of the crinoline and the birth of haute couture, where one dress could easily involve 20 yards of fine fabric, box making was a highly skilled and valued profession. In just a few short years, Louis Vuitton had made a name for himself as an expert in his field and continued to work for Monsieur Maréchal for the next 17 years.

SECURELY PACKS THE MOST FRAGILE OBJECTS. SPECIALIZING IN PACKING FASHIONS

Following Napoléon Bonaparte’s takeover of France in 1851, Napoleon’s wife, Eugenie de Montijo, a Spanish countess, came calling. She appointed Louis Vuitton her layetier and charged him with this mission: “Packing the most beautiful clothes in an exquisite way.” It was through this position that Vuitton was introduced to and cultivated an aristocratic clientele. In 1854, love would change everything. After meeting and marrying 17-year-old Clémence-Émilie Parriaux on April 22, 1854, that same year Vuitton left Monsieur Maréchal to open his own box making and packing workshop, Malletier a Paris, at 4 Rue Neuve-des-Capucines, near  the Place Vendôme, and just a few hundred yards from Maréchal’s workshop. The sign outside Vuitton’s shop proclaimed: SECURELY PACKS THE MOST FRAGILE OBJECTS. SPECIALIZING IN PACKING FASHIONS. Louis Vuitton was open for business. In 1858, just four years after opening his own shop, Vuitton would inadvertently revolutionize luggage when he introduced a new trunk design. Instead of leather trunks with domed tops (which shed water easily and were the prominent trunks of the day), Vuitton relied on his woodworking know-how and designed flat-topped trunks made of a lightweight treated grey canvas called Trianon, which were airtight and more impervious to water and odors—and far easier to stack and ship. The new trunks were a hit, and with the combined advances in travel, Vuitton’s trunks were in hot demand, receiving orders not just from French royalty but Egyptian as well. A year later, in 1859, with business booming, Vuitton moved into a larger shop in Asnières (“donkey farm”), a bucolic village just outside of Paris. He would go on to make custom trunks for many of the top luminaries of the day. By 1870, however, things would take a dramatic turn, as the 296-day Franco-Prussian War lead to the siege of Paris. The French Empire was destroyed. When Vuitton was finally able to return to his workshop in Asnières, he found the entire village in ruins, and his shop looted and pillaged.

A LUGGAGE EMPIRE: NYC, LONDON, BOMBAY & BEYOND

Not one to fold when the chips are down, within months Vuitton built a new shop at 1 Rue Scribe, located in the heart of the new Paris, a far more posh address than his previous location. In 1872, Vuitton debuted a new trunk made of beige canvas with red stripes. An instant hit with the new elite, the design marked the start of a new era for Louis Vuitton: the beginning of the luxury brand. In 1885, Vuitton opened his first store in London, and by 1888 he had trademarked his signature brown-and-tan checked Damier pattern to ward off growing copycats. He continued his successful business, marketing his creations at exhibitions and world’s fairs, until his death on February 27, 1892. He was 70-years-old. Vuitton’s son, Georges, who in 1896 created the company’s iconic LV monogram we know today, continued to grow the burgeoning empire, opening stores in New York, Bombay, Buenos Aires, and beyond. In 1914, he also patented the LV monogram. Explains Paul-Gérard Pasols, former communications director and longtime consultant to Louis Vuitton and author of the authoritative tome Louis Vuitton: The Birth of Modern Luxury: “Before achieving success and global renown, the monogram canvas met with some resistance. Gaston-Louis Vuitton [Georges Vuitton’s son] noted that ‘the public was initially reticent and demanded the checkered and even the striped canvas, but my father stood firm.’ He was as stubborn as his father, Louis, who had followed his intuition and imposed the flat trunk.” Eventually the design won out, as proven by its immense popularity today. That same year, Georges also opened the largest store for travel items in the world, the Vuitton Building, at 70 Champs-Élysées, which would remain the company’s address until 1954. Customers included not only royalty but also literati and glitterati—everyone from Hemingway and Fitzgerald to Audrey Hepburn and Picasso were connoisseurs and customers of Louis Vuitton. Upon Georges Vuitton’s death in 1936, his son, Gaston-Louis, inherited the reigns. Despite some alleged missteps of alliances during the Second World War, Gaston-Louis continued building Louis Vuitton into an international brand, and by 1959 had introduced handbags and wallets, including the iconic Speedy, Steamer, and Pochette. Gaston-Louis also began another tradition that lasts until present day: eye-catching window displays and artistic collaborations. He introduced acrobatic performers, frolicking giant tortoises, Japanese gardens, yo-yoing jugglers, and Santa’s sleigh with three horses. He collaborated with designers such as Legrain, Lebourgeois, Rulance, Conversat, and Puiforcat, creating items both beautiful and practical such as toiletry kits, flasks, and cutlery. During the 1950s, movie theaters and brasseries began to replace the luxury stores along the Champs-Élysées, leading the Vuittons to move the shop to a quieter, more elegant destination, a townhouse at 78 bis Avenue Marceau, which was more in line with their clientele. “Gaston became aware that the Champs-Élysées store was invaded by non-buyers,” recounts Gaston’s grandson Patrick-Louis Vuitton. The new shop lured everyone: the Rothschilds, the Guerlains, King Farouk of Egypt, Christian Dior, Hubert de Givenchy, Diana Vreeland, Catherine Deneuve, Jane Birkin, Kirk Douglas, Jerry Lewis, and Salvador Dali (who took inspiration from the monogram to create a logo he called “The Daligram”). It was here, at Avenue Marceau, that Maison Louis Vuitton celebrated its 100th anniversary in 1954. The shop would remain there until 1970. Gaston-Louis died in 1970, leaving the family divided over how to run the company.

WHEN MOÉT-HENNESSY MET LOUIS VUITTON

Enter Henry Racamier. Married to Odile Vuitton, Gaston’s daughter and Louis Vuitton’s great-granddaughter, Henry Racamier was also from the Jura region and had made his fortune in steel. At the age of 65 he was nearing retirement when the Vuitton family asked for his help in running the business. At the urging of his mother-in-law, he reluctantly agreed and as president of Louis Vuitton aimed to reinvigorate and expand the brand, which by his takeover in 1977 seemed a bit staid. Vuitton had only two stores (one in Paris and one in Nice) and a selling agreement with Saks Fifth Avenue, 60 employees, and annual revenues of between approximately $14 million and $17 million. Racamier astutely recognized that Vuitton’s largest asset was its name and logo. And, he also understood the luxury customer. Famously, when asked by a reporter if Louis Vuitton would ever have a sale, he answered, “No.” He reasoned that customers wanted prices to remain high so that they could be confident the items they were purchasing were valuable. He also knew that the utmost in quality was a major asset and needed to be maintained for success. Racamier also saw that the current generation had less and less need for leather luggage, at least in European markets. Accordingly, Racamier diversified Vuitton’s product offerings, extending the line by adding more luxury leather goods such as handbags, wallets, and belts. And, perhaps most importantly, he set his sights on a new economy: the burgeoning middle class in Asia. In 1978 he opened the first Louis Vuitton stores in Tokyo and Osaka. A second store was opened in Tokyo in 1981 in the Ginza district, followed by store openings in Hong Kong, Singapore, Guam, Indonesia, Thailand, and Taiwan. At the end of 1981, a Louis Vuitton store on 57th Street in Manhattan was unveiled. Henry Racamier also improved production methods, which had not changed much over the years. As a result of increased production, it became necessary to also increase distribution. Further stores opened in Germany, England, Austria, and a new superior address in Paris: 54 Avenue Montaigne. Racamier’s instincts would prove to be right. In June of 1984, the company went public and stock was gobbled up. Racamier realized that Vuitton was a mono-product company and was seeking ways to broaden its range of French luxury brands with good export markets or potential. Another successful family business, Moét-Hennessy, makers of spirits, were looking to do the same. Moét-Hennessy also owned Dior Parfums, which it had purchased in 1968 from the luxury brand Christian Dior and, as of 1985, was being run by French businessman Bernard Arnault. (Arnault and his investment company purchased Dior Parfums for “one symbolic franc,” after it had fallen into bankruptcy. In 1985, Arnault became Chairman, CEO, and Managing Director of the company, improving its financials drastically. Subsequently, he repositioned it as the holding company Christian Dior S.A. of the Dior Couture fashion business.) In 1987, in an attempt to also ward off predators, Racamier merged Louis Vuitton with Moét-Hennessy, thus creating the conglomerate LVMH Moét Hennessy Louis Vuitton. This would mark an historic turning point for the business. Seeking to maintain control from Moét-Hennessy CEO Alain Chevalier after the merger, Racamier allied with Bernard Arnault. At 39-years old, 76-year-old Racamier saw Arnault as his protégé and supporter in any disputes over control of LVMH with Moét Hennessy’s CEO Alain Chevalier. Racamier and Arnault weren’t just business associates, but friends as well. They both shared a passion for music, and would even play the piano together. But it wasn’t long before the bromance soured. Instead of being the ally Racamier desired, Arnault had plans of his own: control of LVMH. When Bernard Arnault came aboard as an investor in LVMH, he owned 25% of shares, making him one of the company’s largest shareholders. Moét-Hennessy’s CEO Alain Chevalier had one vision for the company (selling wine and spirits to another group), while Henry Racamier had another (restoring Louis Vuitton’s independence). Top management in Moét-Hennessy and Louis Vuitton soon realized that they had a different vision of how the new group would function, too. According to a former LVMH executive during the Racamier years, who wishes to remain unnamed, Racamier saw it as a defensive measure to avoid a takeover, especially as he could see no successor in the management or family ranks. “To him, this meant that he had a free hand in acquisitions in the luxury field,” he shares. Alain Chevalier, the CEO of LVMH, and the Moét-Hennessy shareholders wanted a unified group. Meanwhile, Arnault had a vision of his own and in order to see his strategy succeed, launched a takeover bid of LVMH. Explains the executive, who spent 28 years at LVMH, “Arnault realized that Chevalier had more legitimacy than Racamier in the political, business, and banking worlds.” With the help of Lazard Frères & Co. and Crédit Lyonnais, Arnault became majority shareholder of LVMH on January 6, 1989. Chevalier stepped down and on January 13, 1989 Arnault was unanimously elected chairman of the executive management board. Interestingly, Lazard’s Antoine Bernheim was advising Arnault, while his Lazard partner, Bruno Roger, was advising Alain Chevalier. By 1990, Racamier had grown the family business into a billion-dollar luxury empire, setting up over 100 Louis Vuitton shops worldwide and new factories to keep up with demand. Sales in Asia accounted for 40% of Vuitton’s $1.2 billion business. But a bitter battle for the history books played out in the media for two years, as Racamier fought to have the takeover bid by Arnault cancelled. In 1990, it was eventually ruled by French courts that Racamier be dismissed from the board. Racamier was out and Arnault was in, as the new head of LVMH, thus ending the reign of Louis Vuitton as a family business. As for Racamier, after being ousted from LVMH, he largely spent his time on his two passions: music and sailing. He has said that he made  two mistakes: “The first was merging with two mistakes: “The first was merging with Moét-Hennessy. The second was inviting Arnault into the company.” In 2003, Racamier died of a heart attack in Sardinia at the age of 90.

LADIES AND GENTLEMEN…MARC JACOBS

Bernard Arnault’s first move was to fire executives from both Louis Vuitton and Moét-Hennessy whom had actively opposed him in the battle, positioning himself as the leader of LVMH’s future. He also appointed his father Jean Leon Arnault chairman of the supervisory board. During his reign as chairman and CEO of LVMH, Arnault has scooped up many family-owned luxury businesses, with the vision of making them bigger and more successful. The LVMH umbrella now includes fashion brands Givenchy, Céline, Pucci, Fendi, Donna Karan, Thomas Pink, Loewe, Berluti, Kenzo, Stefanobi, eLuxury.com, Marc Jacobs and, of course, Louis Vuitton—which holds the spot for the most valuable luxury brand not only in the LVMH portfolio, but in the world. The group owns more than 50 other brands in other arenas ranging from Sephora and De Beers to spirits, perfumes, and publishers. And, Groupe Arnault (Bernard Arnault’s own holding company) has a 70% ownership stake in Christian Dior and Dior Couture, as well as stakes in Carrefour (the world’s second largest retailer next to Wal-Mart), among others. While presented by the French media as villainous, Arnault has defended himself, likening his tactics to that of a brash American businessman. Others have called the trained engineer-cum-CEO soft-spoken and detail-oriented to the point of obsessive. “I can see little of Gordon Gekko in Bernard Arnault, except strong determination and focus,” says a former LVMH executive. “Unlike Gekko, who was a raider—and an inside trader, jailed for illegal activities whose motivation was greed—Bernard Arnault has purchased companies and has kept them, improving their image, management and profitability.” Whatever the case, Arnault’s magic formula, along with help from Yves Carcelle, who has been at the business helm of Louis Vuitton for the past 20 years, had transformed LVMH into one of the largest luxury groups in the world, increasing sales and profits by 500% and increasing the conglomerate’s value fifteen fold. In the process, Arnault himself has become France’s richest—or second richest, depending on whom you ask—man. How? By investing in stores, advertising, and buying back licenses (to keep from cheapening its portfolio of luxury brands), and, perhaps most importantly, hiring extremely talented and buzz-worthy designers—Marc Jacobs for Louis Vuitton, Phoebe Philo for Celine, Alexander McQueen for Givenchy, and Galliano for Dior, and allowing them creative freedom. Heading into the volatile world of ready-to-wear was a risk for Louis Vuitton, which up until 1997 was an established travel and luxury leather goods brand. But Arnault understood calculated risks and realized that the Louis Vuitton brand needed a jolt of freshness. He gambled on then-34-year-old New York designer Marc Jacobs—and then gave him the creative freedom to create Louis Vuitton’s first ready-to-wear collection. Although Jacobs confesses to having felt enormous pressure, he marched to the beat of his own drummer, collaborating with cool artists like Takashi Murakami and Stephen Sprouse, which sent consumers into a haute frenzy, creating waiting lists miles long for the graffiti-tagged and pop-art-infused cherry-laden creations. Of the risk, Jacobs recounts in the book Louis Vuitton/Marc Jacobs: “I think you have to have a healthy respect and a healthy disrespect for an institution. You need to be respectful in order to preserve, but you have to be somewhat disrespectful in order to evolve.” He explains: “When we did the Stephen Sprouse graffiti, it was a disrespectful act that looked like it was defacing something, but it was also calling attention in another way to something that may go unnoticed. I had all of those feelings about taking the venerable Monogram and sort of defacing it, but it also made it entirely visible for a younger group of people.” He affirms: “It was disrespectful and respectful at the same time, and I think that is why it worked.” As creative director, Jacobs also launched ad campaigns with some of the world’s biggest celebrities—Jennifer Lopez, Madonna, Keith Richards— and some less expected choices—Mikhail Gorbachev, Andre Agassi, and Steffi Graf—which have kept the brand and its consumers on their LV-clad toes. Says Janie Samet in Louis Vuitton: The Birth of Modern Luxury of the designer’s contributions: “Marc Jacobs has transformed in a few seasons a venerable company purring about its pedigree like a prized, fat, purebred cat into a kind of urban wildcat that can run in the streets just as well as in palaces—design with aplomb.” She continues: “Visibly freed of constraints and knowing how to balance his accelerating effects, he has since 1997 propelled Louis Vuitton to the rank of a creative, trend-setting, and universal brand.”

SUR LA LUNE!

Part of LVMH’s success under Arnault has been rapid acquisition, but it’s Arnault’s understanding of the luxury consumer that has helped the group succeed. “If someone buys their mother or girlfriend a bag,” Arnault has said, “he doesn’t want to see it at 60 percent off the next week.” Sound familiar? And like his predecessor Racamier, Arnault sees Asia as the future. “China is feeling the effects of the [economic] crisis, but less than the U.S.,” he has stated. “And when you consider that Chinese tourists are now buying as much as Japanese tourists, when there were virtually none just 10 years ago, I’m not so worried,” he explains regarding if Louis Vuitton can retain its spot as the world’s most valuable luxury brand. And when you consider that 85% of Japanese women own a Louis Vuitton item, Arnault must know what he’s doing. “The management of LVMH and particularly Vuitton has managed to ensure that a quest for quarterly earnings is never allowed to interfere with maintaining the quality of the product or the image of the brand,” says a former LVMH executive. He adds: “Louis Vuitton maintains the value of its brand by ensuring quality in every area: conception, engineering, production, distribution, and communication.” To this day, Louis Vuitton still accepts custom orders from individual clients, virtually unheard of in today’s marketplace. Overseen by Patrick- Louis Vuitton, who represents the family’s fifth generation in the business, he says, “For my great-grandfather, Georges Vuitton, it was essential that the customer’s belongings travel in the greatest comfort,” hence allowing customers to create their dream travel piece. LVMH now has 56,000 employees. And, Arnault hopes to one day pass the torch to at least one of those employees, perhaps someone in his own family. Two of Arnault’s five children currently work for LVMH: Delphine Arnault-Gancia, 33, his daughter from his first marriage, who is the deputy managing director for Dior, and Antoine Arnault, 31, who is Louis Vuitton’s communications director. Arnault has said that if his children like the business, then they will be a part of it. Will they—or anyone—be able to fill Arnault’s perfectly polished shoes? Or Carcelle’s for that matter; last fall he announced he will be stepping down from Louis Vuitton in 2013. Only time will tell, but the symbolism of a few new adventures indicate that LV’s future is, indeed, bright. In 2011, LV broke their hard and fast rule of not being in airports when they opened a 550-square meter megastore in the Incheon Airport in Korea (Carcelle described the opening as “the world’s best airport and luxury brand joining hands”); and this summer its first-ever Maison in China, a four-floor gleaming vision of LV’s future in the Far East. And, of course, the dazzling Louis Vuitton Island Maison store at the Marina Bay Sands Center in Singapore. Designed by award-winning architect, Peter Marino, the store is breathtaking: a golden-lit crystal jewel bobbing in the bay like a sleek ocean liner replete with an art gallery, a majestic spiral staircase, and an outdoor jetty where deep-pocketed shoppers arrive via boats. What could be next for Earth’s most valuable luxury brand? Don’t be surprised to hear Louis Vuitton proclaim next: Sur la Lune!

Kelly Lee is a Beverly Hills-based lifestyle, travel, and fashion writer and is the editor of the popular daily style blog KellyGolightly.com. When she’s not sharing her discoveries with readers around the globe, she can be found shooting photos in the desert, scouting the next “it” destination, hunting for vintage treasures, or tasting the local delicacy of whichever country she finds herself in next.