Louis Vuitton:

Sustainable Luxury?

In early 2025, Michael Burke, former CEO of Louis Vuitton and CEO of LVMH’s Fashion division, and
Pietro Beccari, current CEO of Louis Vuitton, the largest and most profitable subsidiary of LVMH
(Louis Vuitton-Moët Hennessy), were in a meeting with Vincent Barale, the Supply Chain and Logistics
Executive Vice President of Louis Vuitton, to examine how to further enhance the supply chain of the
company both in terms of sustainability and economic performance. Over the prior 20 years, Louis
Vuitton’s revenues had increased almost tenfold. This growth was notably fuelled by a parallel
increase in the number of categories and products. The number of SKUs (Stock Keeping Units) went
from 5000 in 2000 to 20000 in 2024. This increase, initially a challenge to the company’s supply chain,
had led to a major overhaul which made Louis Vuitton’s supply chain one of the most efficient in the
industry and, according to most analysts, one of the major drivers of the company’s success.

As luxury goods customers were sensitive to quality of service and expected almost immediate
availability of the products they sought to purchase, Louis Vuitton had been driven to increase the
share of air freight in its supply chain. By 2020, air freight accounted for close to 100% of all deliveries
beyond 500 kilometres. However, the rise in environmental concerns to which the company and its
employees were very sensitive, cost considerations, as well as a broader concern about the role of
LV’s supply chain in the firm’s strategy, were driving the company to re-examine the organization of its
supply chain.

The Luxury Goods Industry

Luxury goods had alternatively been described as “products no one needs” or as “items that serve
little purpose in the lives of consumers, except to fulfill dreams”. With such a fuzzy definition, it was no
wonder the precise boundaries of the “luxury goods industry” remained blurred, at best. While haute
couture, perfume and jewelry unquestionably belonged to the universe of luxury, segments of many
other industries such as the hotel business, the automobile industry, the cruise industry, wine and
spirits, or even the airline or real estate industry, might also have qualified as luxury businesses.

Very broadly speaking, products traditionally considered to be luxury goods pertained to five main
categories:

1. Clothing products targeted at individuals, which were often derived in one way or another from
haute couture. This first category of luxury goods included such products as designer clothes,
leather goods, shoes, eyeglasses, jewelry, watches, and other accessories;
2. Bags and luggage
3. Perfumes and cosmetics;

This case was developed by Pierre Dussauge and Valérie Moatti as a basis for class discussion rather than to
illustrate either effective or ineffective handling of a management situation. The data provided in this case were
gathered from public sources or are case writer estimates. The authors are very grateful to Vincent Barale, EVP
Supply Chain, Anne Borde, Director Supply Chain and their teams for providing the guidance and information
without which this case could not have been written.
Louis Vuitton 2

4. Home furnishings and decoration, a more recent development in the luxury goods sector; this
primarily covered china, crystal and silverware, and also included household linens, lighting and
some furniture;
5. Luxury services such as luxury hotels, fine dining…

Overall, the luxury-goods sector had enjoyed very rapid growth for over 30 years. This growth was
fueled by the ever-expanding variety of product lines, notably accessories, offered by luxury brands.
While many categories of luxury goods were growing very fast, others, such as jewelry and watches
were experiencing much slower growth. Growth in luxury goods sales was also made possible by the
progressive opening up of the market to a much wider range of customers. Very wealthy clients had
traditionally been the major segment targeted by luxury brands but, in more recent years, the market
was attracting a wider set of potential buyers. Luxury goods were no longer reserved to an elite but
had come within reach of an increasing number of people. These new customers were younger and
made more occasional purchases. Sales were very seasonal, and purchases made during the holiday
season accounted for a disproportionate share of the business. Customers of such expensive items
were very demanding. And as luxury goods were by no means essential, sales were very sensitive to
the overall economic climate.

Most top luxury brands originated from either France or Italy and, in more recent years, from a few
other countries, Spain and the United States in particular. Two major types of companies operated in
the luxury goods business: on the one hand, large conglomerates built-up through the acquisition of
numerous specialized brands had emerged during the 1980s and 1990s. The three world leaders
were LVMH (Louis-Vuitton-Moët-Hennessy), Richemont (which owned such famous brands as Cartier,
Lancel, Chloe, Van Cleef & Arpels, Montblanc), and Kering (owner of Gucci, Yves Saint Laurent,
Balenciaga, Bottega Veneta and Boucheron, among others). On the other hand, family-owned
companies such as Hermes, Chanel, Prada, Longchamp or Rolex had also managed to thrive in the
luxury goods business. In the past decades, the luxury goods sector had been affected by a wave of
mergers and acquisitions.

Western Europe, North America and East Asia had become the three largest markets for luxury
brands. Asia, and most notably China, had accounted for a major portion of the growth of the industry.
More recently, many luxury brands had shifted their efforts on emerging parts of the world such as
South America, Eastern Europe, India and above all, the Middle East, with the UAE and Saudi Arabia
alone expected to reach €35 billion in sales by 2030.

LVMH

Formed in 1987, LVMH rapidly expanded to become the undisputed world leader in luxury goods. In
2023, it achieved €86 billion in sales, with a 27% operating margin and an 18% net margin. The
company employed 200,000 people and owned over 5600 retail outlets throughout the world (over
90% of which were based out of France and 41% in Asia). In 2021, 2022 and 2023, LVMH’s sales had
grown 44%, 23% and 7.5% respectively. By 2023, sales had fully recovered from the Covid crisis, and
were even 20% above 2019 pre-covid sales.

It had taken Bernard Arnault, the CEO of the company, less than a dozen years to build up LVMH
through the acquisition of numerous luxury brands, an expansion into retailing and an aggressive
globalization strategy. LVMH was named after the first two companies that were merged in 1987 to
create the company: the luggage and leather-goods maker Louis Vuitton and the Champagne and
Cognac producer Moët-Hennessy. In subsequent years, many more famous luxury goods producers
were taken over and added to the conglomerate’s brand portfolio: Christian Dior, Guerlain, Fendi,
Kenzo, Loro Piana, Céline, Dom Pérignon, Tag Heuer, Loewe, Marc Jacobs, Bulgari… LVMH also
entered selective retailing by taking over DFS (Duty Free Shopping, the world’s largest chain of airport
shops) in 1996 and Sephora in 1997. LVMH’s expansion into retailing proved less successful than
expected: the retail division was long significantly less profitable than other LVMH activities. DFS saw
its profits drop 66% and its sales decline by 16% the year after it was acquired by LVMH. But this was
blamed primarily on bad timing, with Asia, where most DFS stores were located, entering a deep
recession shortly after the acquisition. However, after struggling for more than two decades, selective
retailing had become profitable. By the early 2020s, Sephora had established itself as the worldwide
leader in perfume and cosmetics retailing. Other selective retailing channels such as Le Bon Marché,
24sevres.com and La Samaritaine were also leveraged to showcase LVMH’s brands.
Louis Vuitton 3

By early 2024, LVMH owned over 60 subsidiaries and 75 well-known brands operating in six main
sectors: Wines & Spirits (which accounted for 9% of sales), Fashion & Leather goods (49% of sales),
Perfumes & Cosmetics (10% of sales), Watches & Jewelry (13% of sales) and Selective Retailing
(19% of sales). Other activities (including the emerging hospitality activity) still accounted for a very
minor share of total sales. Appendix #1 lists the main brands owned by LVMH. The two divisions on
the basis of which LVMH was originally founded (Fashion & Leather goods on the one hand, Wine &
Spirits on the other) were still the most profitable, with 2023 operating margins of 42% and 32%
respectively. LVMH’s sales were fairly evenly distributed across three main geographic markets:
Europe accounted for 24% of total sales, Asia for 37%, and the United States for 27%. Other markets
were growing fast but overall accounted for only12%.

While each individual brand enjoyed a great deal of autonomy, LVMH nevertheless tried to leverage
potential synergies across the entire company. For example, outlet locations were closely coordinated
across brands in order to benefit from clustering effects: the idea was for customers to be attracted by
one brand’s store and then drift on to other luxury brand outlets, which allowed for enhanced cross
selling. Also, in all countries except France, all the brands operating under the same corporate division
would share the same vice president for finance and the same VP for human resources: "This allows
us to transfer salespeople from one store to another or to appoint as managers of a new store people
who have already demonstrated their abilities working for a different brand" explained one of LVMH’s
senior managers.

In the 2010’s, LVMH diversified into hospitality management with the launch of the ultra-luxury Cheval
Blanc franchise and the acquisition of the Belmond group in 2019. By 2023 the hotel business was still
a very small contributor to the corporation’s overall sales and profit. In 2021, LVMH acquired Tiffany’s
for $14.3billion. It was, at the time, the largest acquisition the company had undertaken since its
creation in 1987, and quickly turned out to be a remarkable success. The New York-headquartered
jewelry company doubled its profitability in the two years following its takeover by LVMH.

Louis Vuitton

Set up in 1854 by a young trunk-maker by the name of Louis Vuitton, the company started out
designing and manufacturing innovative stackable trunks and marketing them through a company-
owned sales outlet located in Paris. Then, in 1876, the company introduced luxury trunks with
detachable frames. The company’s initial success enabled it to set up a store in London as early as
1885. Louis Vuitton's son, Georges, created the legendary Monogram design that incorporated his
father's LV initials that were to become famous the world over. In 1959, Georges' grandson invented a
new chemical process to produce a highly resistant yet soft-coated canvas to be used for both stiff
luggage and soft bags. The Monogram collection dating back to the company’s early years still
accounted for close to 50% of the company's global sales in 2023! In more recent years, further
classic leather goods lines were launched and turned out to be highly successful. In 1985, the Epi
leather collection was introduced, first in black and brown shades then expanded to include new bright
colors. The Damier line was manufactured on a large scale in 1996 for the Monogram's 100th
anniversary and was such a success that it soon became a permanent Louis Vuitton line.

Louis Vuitton’s major expansion occurred quite late, under the chairmanship of Henri Racamier - a
graduate of HEC Paris - who happened to be married to an heiress of the Vuitton family. In 1977,
when Racamier took over the family-run company, total sales were about €10 million. By 1987, they
had increased to over €600 million. In 1987, Henri Racamier decided to merge Louis Vuitton with
Moët-Hennessy to form LVMH. One year later, Bernard Arnault, who was then the CEO of Dior, made
a takeover bid for the recently formed LVMH group. After a long and bitter legal battle, Arnault
eventually managed to take over the company in 1990.

In 2023, Louis Vuitton was still the largest and by far the most profitable subsidiary of LVMH. Though
the company did not disclose detailed figures on each brand, it was estimated that Louis Vuitton alone
accounted for more than half of the total sales of the Fashion & Leather goods division. Also,
according to most analysts, Louis Vuitton contributed to approximately 25% of LVMH’s total sales and
over 50% of total profit. Louis Vuitton's 2023 sales were estimated to be between €20 and €25 billion,
making the company the largest luxury goods brand in the world. Its closest competitors were Chanel,
Hermes and Gucci with sales of respectively €16 billion, €13 billion and €10 billion. For over 30 years,
Louis Vuitton enjoyed an average annual growth rate in the range of 10%. Leather goods, in particular
the legendary Monogram collection of luggage and handbags, continued being the company’s main
line of business. In 2023, Asian sales accounted for about 50% of the company's business.
Louis Vuitton 4

In addition to sales and profit objectives, since the early 2000s, Louis Vuitton had increasingly been
considering the environmental impact of its business in its performance indicators. In particular, Louis
Vuitton had been conducting periodic assessments of its carbon footprint. In 2023, Louis Vuitton’s
annual carbon emissions totaled about 1.5 million tons of CO2. And the company had given itself the
ambitious objective of decreasing CO2 emissions by 55% by 2030.

Louis Vuitton’s lines of business

Louis Vuitton organized its business into four major product lines:

- “Leather goods”, essentially bags and luggage - most of which were in fact not made primarily of
leather - were the company’s core business. This business accounted for an overwhelming portion of
total sales, 80% according to most estimates. Most leather goods collections were classic products
with extremely long life cycles - several decades in many cases -, while fashion-driven products with
a short life span only accounted for 20% of sales. Overall, leather goods accounted for 15% of all
Louis Vuitton SKUs.
- “Shoes” accounted for less than 5% of Louis Vuitton sales and for about 25% of Louis Vuitton SKUs.
60% of the shoe designs were highly seasonal.
- “Designer clothes and ready-to-wear lines” accounted for about 5% of Louis Vuitton sales but 40% of
SKUs. They came in four annual collections and were presented in fashion shows such as the
spectacular Spring-Summer 2024 show designed by Pharell Williams and which took place on the
“Pont-Neuf” in Paris. 80% of the products in this category were seasonal.
- “Watches and jewelry” accounted for approximately 10% of Louis Vuitton sales and 20% of its SKUs.
Watches and jewelry were, for the most part, permanent products.

It was not until 1998 that Louis Vuitton departed from its exclusive focus on bags and luggage. That
year, the company introduced for the very first time both a line of shoes and a collection of ready-to-
wear clothes. Watches were introduced in 2002, and it was not until 2004 that the first full line of Louis
Vuitton jewelry was created.

As was the case with most luxury goods firms, Louis Vuitton’s cost of goods sold (COGS) only
accounted for a small fraction of total costs. According to most estimates, COGS was no more than
15% of total sales, with industry averages ranging from 20% to 30%. Despite very high design and
marketing costs, Louis Vuitton’s net operating margin was estimated to be over 50%, more than
double the industry average of 25%.

Manufacturing and logistics

Louis Vuitton relied on a limited number of highly specialized suppliers, most of which were based in
France and in a few neighboring European countries. Major raw materials were leather and canvas.
Louis Vuitton paid special care, of course, to the quality of inputs, but also to their environmental and
social impact. For example, all the cotton and silk used by the company was organic and received the
GOTS (Global Organic Textile Standard) certification. It took an average of 6 to 8 weeks for major
supplies such as leather, canvas, clasps and clips to be delivered. As a consequence, Louis Vuitton
maintained 10 weeks of raw materials and component inventory. This allowed the company to
respond to shifts in demand at relatively short notice without building up too much inventory of finished
goods.

The only product line that Louis Vuitton manufactured in-house was “leather goods”. The 3000 SKUs
in this line were manufactured in 21 facilities (13 were located in France, 2 in Spain, 2 in Italy and 4 in
the US). A major motivation for maintaining most manufacturing activities in France was the “made in
France” label, which was seen as very valuable by some customers, notably in Asia. The plants
located in the US only served that local market though many products sold in North America were still
shipped from abroad.

Based on actual sales or on sales forecasts for new products, as well as on the priorities set by the
Executive Committee, volumes to be produced were trickled down to the various production facilities
and subcontractors. These volumes were then adjusted based on manufacturing capacity constraints.
Even though Louis Vuitton had consistently set up new manufacturing facilities during the past 20
years, capacity lagged behind demand, constraining the company to make tough choices. Seasonal or
Louis Vuitton 5

fashion products had to be made available and promoted during very specific time slots, contrary to
more permanent items which could occasionally become unavailable without this jeopardizing the
overall performance of the brand. Short-life cycle products had an average life span of 6 months. To
avoid ending up with unsold inventory, Louis Vuitton only launched the manufacturing of 40% of
expected sales, ramping up production if market demand was sufficient. Louis Vuitton chose not to
systematically follow demand, deliberately limiting available quantities on some products, thus freeing
up production capacity for other lines. This Sales & Operation Planning (S&OP) process was aimed at
reducing inventory as much as possible and at maximizing sell-through. Sell-through, i.e., the
proportion of product units shipped from a manufacturing facility that were ultimately sold at the end of
a given period (traditionally one year), was 99.7% for permanent lines and 80% for seasonal and
fashion lines (i.e. short-life cycle products). Sell-through at other luxury brands was typically in the
range of 50% to 70%.

Louis Vuitton’s reliance on long-term forecasting was very limited except for deciding on production
capacity expansion and, to a lesser extent, for raw materials and component procurements. The
S&OP process was geared towards reducing finished product inventory as much as possible.

A tradition of craftsmanship continued to prevail within the Louis Vuitton manufacturing process. One
facility still produced customized, made-to-order trunks. 100 such trunks, each requiring about 110
hours of work - and selling for about €30,000-, were produced every year. Even for more “standard”
products, the manufacturing process was very labor intensive, required highly skilled employees and
was aimed at ensuring very high-quality standards. It was estimated that over 80% of the tasks carried
out in the manufacturing of a Louis Vuitton bag were done by hand; a team of 24 could make no more
than 120 handbags per day. As a consequence, training was essential. In particular, workers were
trained for months before new product introductions. Hiring and training were a major bottleneck in
manufacturing, preventing Louis Vuitton from adjusting overall output upward or downward at short
notice. Production could, however, be reallocated across specific products to some extent. Some
tasks were highly automated, and Louis Vuitton took great pride in how it was able to successfully
combine sophisticated manufacturing technology with highly skilled craftsmanship. Overall, Louis
Vuitton’s production volumes, notably on its more popular leather goods, allowed it to achieve greater
economies of scale than most of its competitors. Multi-tasking within the manufacturing process was
widespread, allowing for the flexibility and responsiveness mentioned above. The average
manufacturing cycle time for bags (i.e. the time work-in-progress spent in the plant) was 5 days.
According to estimates, manufacturing a Louis Vuitton bag end-to-end required four times the amount
of materials than what ultimately ended up in the finished item, and produced about 60kg of CO2
emissions.

A single central warehouse located in Cergy-Pontoise, France, centralized the logistics function for all
plants globally (except for the 4 plants located in the US). Goods manufactured in Louis Vuitton's
European plants or procured from subcontractors were forwarded daily to the central warehouse. On
average, products remained for about a month in storage at Cergy-Pontoise. Louis Vuitton also
operated 23 regional warehouses throughout the world. These regional warehouses supplied all the
stores in the corresponding region on a daily basis with deliveries based on the previous day’s actual
sales. The regional warehouses also organized the reallocation of items across stores daily. Products
were also reallocated across regional warehouses when demand for those products was higher in one
region of the world than in another. This allowed Louis Vuitton to be responsive to discrepancies
between anticipated and actual sales of a given product in a given area. Traditionally, Louis Vuitton
stores had placed orders based on past sales and store manager anticipations of future sales. This
was still the prevailing system at most luxury goods companies. Because the main objective of store
managers was to maximize sales, they sought to avoid shortages at all costs and thus tended to
overestimate their needs, which resulted in too much inventory being held in stores. This in turn drove
most brands to discount unsold items significantly or even to destroy left-over inventory.

Starting in the early 2000s, Vincent Barale had completely upended the Louis Vuitton supply chain
and created a centrally managed store replenishment process. Store managers no longer had a say in
the selection and quantity of goods delivered to their store. Instead, store replenishment was decided
on a day-to-day basis by central supply chain teams. Overall, finished product inventory located all
along the supply chain (in manufacturing facilities before shipping, in central and regional warehouses,
in stores as well as during transit between these various stages) amounted to 63 days of sales, down
from over 8 months 20 years earlier. Industry averages were estimated to be between 8 to 10 months
of inventory.
Louis Vuitton 6

In addition to its leading role in organizing flows and managing inventory, the central logistics center
also handled returns of faulty, damaged, out-of-fashion, and other unsold products. A specific
workshop within regional warehouses (15 workshops in total) handled repairs of worn-out or damaged
products that customers sought to continue using. 700,000 bags and leather goods were repaired
annually by a team of 600 to 700 experts, generating over €150 million in revenue. Louis Vuitton
occasionally repaired trunks, suitcases and bags dating back to the early 20th century. This repair
service was expected to grow significantly in future years.

Overall, logistics accounted for 2% of sales, with 50% of these costs attributable to transportation.
Transportation also accounted for 20% of LV’s CO2 emissions. Short-distance deliveries were
undertaken using natural gas-powered trucks. Louis Vuitton was also involved in research on
hydrogen-powered vehicles and was considering this as an alternative energy for its transportation
needs in the future. Long-distance transportation was all carried out as air freight, all of it provided by
D.B. Schenker with which Louis Vuitton had established a long-term partnership. For the last few
years, Louis Vuitton had required that all aircraft transporting its goods use as much SAF (Sustainable
Aviation Fuel, biofuel generating 25% less carbon emissions than regular fuel but costing 3 to 5 times
more) as technically possible, generally around 30%. With fuel accounting for approximately 20% of
transportation costs, this was a significant commitment to sustainability and made Louis Vuitton the
largest user of SAF in the world. Some questioned the relevance of focusing on SAF to such an
extent, arguing that the production of SAF was highly energy dependent. Also, with SAF in short
supply, the volumes utilized by Louis Vuitton were no longer available for other users who then had no
choice but to use fossil fuels.

To further reduce its environmental footprint, Louis Vuitton had begun reorienting some of its
intercontinental transportation towards maritime freight. Louis Vuitton’s supply chain was the first in
the world to be awarded ISO14000 certification for its environmental performance in 2015. Overall, to
achieve the ambitious objective it had set for itself, i.e. reducing the greenhouse emissions for each
item produced by at least 55% by 2030, Louis Vuitton also offered training on climate change to all
Supply Chain employees.

Distribution

Louis Vuitton exclusively sold its products in its own stores, in Louis Vuitton-managed "shops in the
shop" (also known as “corners”) within large department stores, and through its own website. This
exclusive distribution policy applied to all product categories, including perfume, watches, and
eyeglasses, that most other brands tended to sell in outlets such as Sephora and specialized jewelry
stores and eyewear retailers. The total number of Louis Vuitton outlets had grown from 240 in 2000 to
470 in 2023. These outlets were located in 60 countries, mainly in Europe, North America and Asia.
Louis Vuitton stores varied significantly in size, from 50 square meters to over 3,000 square meters in
the case of flagship stores. The range of SKUs available in a given store varied from a few hundred in
the smaller stores to almost the total 20,000 Louis Vuitton SKUs in the 30 largest flagship stores. All
Louis Vuitton stores carried leather goods while only larger stores offered all product categories. Since
2010, online sales had been growing rapidly and in 2024 accounted for 10% to 15% of sales. In
addition, 5% to 10% of sales were carried out with salespeople entering an online order on behalf of
customers requesting an item not available in the considered store. The top 20 bestselling products
were the same in stores and online, but the absolute top 3 best sellers online were cheaper than the
top 3 best sellers in stores.

Louis Vuitton stores held very little inventory and most items available in the store were on display. As
a result, stores had very little space devoted to storage (10% on average). The average Louis Vuitton
store held an inventory of 12,000 items and, for 94% of SKUs, only one piece was available in stock.
For 85% of Louis Vuitton SKUs, the average store sold no more than one item per month.

In total, in 70% of the cases, a customer seeking to purchase a particular product could be served on
the spot. For the remaining 30%, a salesperson could place an order online, the customer could return
at a later date, visit another store or be convinced to buy a different product. Louis Vuitton
management estimated that no more than 10% of those customers not finding the item they sought in
the store they were visiting, would end up not making a purchase. Overall, Louis Vuitton sold close to
10 million items in 2023. Distribution costs accounted for around 20% of sales.
Louis Vuitton 7

Marketing, sponsoring and communication

Luxury goods required significant investments in marketing, sponsoring and media coverage. Still,
advertising expenses accounted for only about 5% of Louis Vuitton's sales. 70% of Louis Vuitton's
advertising spending was aimed at enhancing the overall image of the brand. These marketing
investments went to campaigns featuring celebrities such as Keith Richards, Mikhail Gorbachev,
Lionel Messi and Cristiano Ronaldo. In recent years, a lot of advertising was aimed at generating
social media exposure. The remainder of Louis Vuitton’s marketing investment was aimed at
supporting new product introductions and short-life lines. Louis Vuitton introduced on average 40 new
SKUs per week, most of which were seasonal and fashion-related products. For example, the line of
colorfully spotted bags designed by Yayoi Kusama in 2023 was supported by significant marketing
investments: a giant statue of Yayoi was set up by Louis Vuitton’s headquarters and the Harrods store
in London was completely redecorated accordingly, not to mention all the events organized in flagship
stores.

A fundamental feature of Louis Vuitton’s marketing strategy was that products were never discounted.
The only exception was private sales to employees. About 50% of all unsold products were sold to
employees with an average 70% discount. In contrast, competitors routinely discounted less popular
product lines, if not in their own distribution network, through secondary channels. These discounts
ranged from 30% to 70%, sometimes more, but on average were 50% of the full retail price. In the
case of Louis Vuitton, whatever items remained unsold (after regular sales and private sales to
employees), used to be disposed of but, in more recent years, following new regulations passed at the
European level, these unsold items were taken apart in order to recycle components and raw
materials. Some 10% of all fashion-related and short-life-cycle products had to be recycled every year.

In addition to traditional marketing, Louis Vuitton spent about €100 million to fight the illegal imitation
of its products. Counterfeiting was indeed a critical concern. It was estimated that, in the early 21st
century, the market bought as many fake Louis Vuitton bags as it did genuine ones.

Louis Vuitton’s dilemma

Louis Vuitton’s phenomenal success over the past 20 years was, paradoxically, creating concerns for
the brand. With so many people in the world owning a Louis Vuitton item, was the brand still exclusive
enough to convey the luxury image that was at the foundation of its success? While other successful
luxury brands also faced the same issue, in the case of Louis Vuitton, the problem was confounded by
the fact that the brand and logo were made very conspicuous on most items. Some analysts believe
that a trend towards “quiet luxury” was spreading across the world and might create a challenge for
Louis Vuitton. Also, with environmental concerns growing in society at large, but also within the
company, and with Louis Vuitton priding itself on its emphasis on sustainability, was the pace of
growth the company had experienced so far still acceptable?

Study questions:

1. What were the key features of Louis Vuitton’s business model? What role did the company’s
supply chain play in this business model?

2. To what extent should Louis Vuitton require that its carriers exclusively use sustainable aircraft
fuel (SAF)?

3. Should Louis Vuitton reintroduce a significant portion of maritime freight? And if so, what
criteria should be used to decide which logistic flows should switch back to maritime freight?

4. What would you recommend for Louis Vuitton to further reduce its environmental footprint and
achieve its ambitious sustainability objectives?
Louis Vuitton

Appendix #1: LVMH brands and lines of business

Wines & Spirits Fashion & Perfumes & Watches & Selective Other Activities
Leather goods Cosmetics Jewelery Retailing

Moët & Chandon Louis Vuitton Dior TAG Heuer DFS Belmond

Starboard Cruise Maisons Cheval

Dom Pérignon Céline Givenchy Dior Services Blanc

Mercier Loewe Guerlain Gerald Genta Sephora Connaissance des

Arts
Veuve Clicquot Kenzo Kenzo Zenith Le Bon Marché Cova

La Grande Jardin
Glenmorangie Givenchy Loewe Repossi
Epicerie d’Acclimatation

Krug Christian Dior Fresh Chaumet La Samaritaine Investir

Ruinart JW Anderson Sephora Fred Le Parisien

Cloudy Bay Marc Jacobs Aqua di Parma Bulgari Les Echos

Cape Mentelle Berluti Make Up For Ever Tiffany’s & co Radio Classique

Ao Yun Off-White BITE Beauty Daniel Roth Royal Van Lent

BeneFit
Newton Vineyard Fendi Hublot
Cosmetics

Colgin Cellars Loro Piana Cha Ling Ebel

Fenty Beaty by
Hennessy Emilio Pucci
Rihanna

Volcan de mi KVD Vegan

Moynat
Tierra Beauty
Maison Francis
Château d’Iquem Stella McCartney
Kurkdjian

Ardbeg Rimowa Marc Jacobs

Officine
Belvedere Patou
Universelle
Bodega
Phoebe Philo Ole Henriksen
Numanthia
Château Cheval
Blanc
Château
d’Esclans
Cheval des Andes
Terrazas de los
Andes
Clos des
Lambrays
Woodinville
Louis Vuitton 9

Appendix #2: Financial data on LVMH (in million €)

LVMH Consolidated Profit 2020 2021 2022 2023

Operating profit (€ million) 8305 17151 21055 22802

Operating margin (%) 19 27 27 27

Net profit (€ million) 4702 12698 14084 15174

Sales by Business Line (€ million) 2020 2021 2022 2023

Wine and Spirits 4755 5974 7099 6602

Fashion and Leather Goods 21207 30896 38648 42169

Perfumes and Cosmetics 5248 6608 7722 8271

Watches and Jewelry 3358 8 964 10581 10902

Selective Retailing 10155 11754 14852 17885

Other Businesses (70) 19 281 324

Total 44621 64215 79184 86153

Operating Profit by Business Line (€

million) 2020 2021 2022 2023

Wine and Spirits 1388 1863 2155 2109

Fashion and Leather Goods 7188 12842 15709 16836

Perfumes and Cosmetics 80 684 660 713

Watches and Jewelry 302 1679 2017 2162

Selective Retailing (203) 534 788 1391

Other Businesses (450) (451) (274) (409)

Total 8305 17151 21055 22802

Source: 2022 & 2023 annual report
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Appendix #3: Transportation alternatives

CO2 emission in
Duration Estimated Cost
g/ton/km

Sea/Surface 3 weeks €100 / ton 20

Freight

Regular Air 4 days €4000 / ton 1000

Freight

SAF 4 days €5000 / ton 750

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Appendix #4: A selection of Louis Vuitton products

The iconic “Neverfull” bag of the Monogram collection

The iconic “Speedy” bag of the Damier collection

An example of a 2024 bag with the traditional Epi leather

An example of the limited Yayoi Kusama edition

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An example of a Louis Vuitton trunk

Examples of Louis Vuitton apparel, footwear and jewelry