In late January of 2024 in Miami (this year), LVMH will host its annual Watch Week event where media and guests are flown out from around the world to preview some of the hottest new timepieces from the major luxury group’s watchmakers including TAG Heuer, Zenith, Hublot, Louis Vuitton, and Bulgari. In addition to new products, LVMH has announced rather big changes to some of its leadership team, prompted by the promotion of Frederic Arnault. As the son (one of several children) of LVMH Group leader Bernard Arnault, Frederic Arnault now steps into the corporate management position, which his predecessor Stephane Bianchi at TAG Heuer stepped into when Arnault took the CEO position at TAG Heuer back in 2020.

Presumably, Mr. Bianchi is now out as CEO of LVMH Watches, making room for Frederic Arnault to step in. Unlike the more public and visible role of brand CEO, the head of LVMH Watches is more managerial, and less on the creative or product side. LVMH watch brand CEOs report directly to the CEO of the LVMH Watches Division, which will now be held by Frederic Arnault. With brand-running experience now under his belt, the presumption is that Frederic Arnault will continue to climb the responsibility and power ladder at the company. It is often pointed out that while among the “sexier” luxury products made by the LVMH Group, wristwatches nevertheless represent a relatively small portion of overall corporate earnings. Why then is there so much interest among the Arnault family members (not all of them of course) to actively manage this segment of LVMH products? The simple answer is “desire.” According to a number of insiders, watches are the most desirable (in terms of pricing, quality, complexity, etc.) object category that a luxury firm like LVMH can produce. There is a natural gravitation for the top leaders to actively oversee the development, marketing, and sale of “desire,” which is an intangible but is also probably the most important resource that a group like LVMH trades in.

With Frederic Arnault in the top position at the LVMH Watch Division, this leaves an opening at TAG Heuer to fill. Rumors last year already suggested that Zenith’s then-current CEO Julien Tornare would replace Mr. Arnault at TAG Heuer – which is exactly what happened. Julien Tornare was someone who originally came from Richemont but had a very successful time running the challenging Zenith brand. He was hired in 2017 when Jean-Claude Biver was still in a top-level leadership position at LVMH – who himself was an interim CEO of both TAG Heuer and Zenith for a while. According to Mr. Biver at the time, from a marketing perspective, Zenith was the hardest nut to crack. Mr. Tornare has thus done a very good job given the stakes and opportunities presented to him. His hard work has paid off, and now Mr. Tornare will enjoy greater resources and responsibility at TAG Heuer. The brand will be re-expanding its product portfolio in 2024, relaunching a product category (not watches) that was profitable for it in recent decades. Julien’s energy, enthusiasm, and creativity will be fully required at his new role as the CEO of TAG Heuer.

With Mr. Tornare leaving Zenith, that left another management opening to fill for LVMH. Once again, LVMH goes to Richemont and chooses a star player who has less often been in the spotlight to fill the CEO position at Zenith. Richemont has had a talent flight of late, with LVMH currently being seen by some as a more dynamic, stable, and creative place to work if you are interested in watches. Now Mr. Benoit de Clerck will be the CEO of Zenith, and he comes most recently from working a high-level sales management position at Panerai. I originally met Benoit when he was working at IWC some years back, although I have not experienced Mr. de Clerck in a CEO leadership role, so he has yet to reveal his style. He is smart and hardworking, with a penchant for practicality and performance. I am looking forward to speaking with him to understand what his plans are for Zenith, and how he feels about being at a new group after many years of being at Richemont.

What we really don’t know yet is how any of this news will affect consumers and translate into production changes or decisions. Given that Zenith released a lot of desirable products under Mr. Tornare’s tenure, there is great enthusiasm that TAG Heuer will likewise enjoy his prolific ability to focus on many different watch models and styles at the same time. Frederic Arnault has been a pragmatic and studied leader of TAG Heuer, but his larger ambitions for the LVMH Watches Division remain unknown. My guess is that his main focus will be to keep the LVMH watchmakers as competitive as possible, while ensuring that each of them comes out with headline-catching new products on a regular basis. He will no doubt want to make sure that appeal and visibility for the brands he oversees remain high over the next few years. Careful and cautious, I don’t think Benoit de Clerck will make any major immediate changes to Zenith from a product or sales perspective. My guess is that he will take a few years to study the market and overall brand performance, and then to choose trusted voices within his circle to rely upon for making product and other creative decisions. He does not strike me as someone who likes to rock the boat, as opposed to someone who wants to improve the system he inherits prior to making changes to it – but we will see.