Richemont: Icon in Luxury

In the world of luxury, the one that survives is the one who has the ability to reinvent and entrust its heritage to newer generations. A luxury brand that is sustained through generations is like a living being; it recreates and innovates.  Luxury goods have become a way of life in the modern times.

Compagnie Financière Richemont was established to be the holding company for the international interests of the Rupert family.  Through the years it has grown as world icon in luxury goods. Among the brands owed by Richemont are Lancel, Chloé, Officine Panerai, Vacheron Constantin, Piaget, Baume & Mercier and Cartier. On top of these, Richemont also owns 80% of the stakes at Van Cleef & Arpels, a world renowned jeweler.

Richemont was established in 1988 as a spinoff of the Rupert family’s core company, the Rembrandt Group Ltd. Rembrandt was originally engaged in tobacco manufacturing before the World War II.

When the company was affected by the fluctuating currencies in 1992, Richemont decided to split the tobacco business and the luxury goods business into two separate entities. The luxury group was named Vendome. Vendome was further divided into two groups, the Vendome PLC and Vendome SA.

Of the stakes at Vendome, 70% was owned by Richemont, 18% was owned by Rothman International, 8% was owned by Dunhill, and the remaining 4% was owned by other investors. In order to gain absolute control of Vendome, Richemont purchased Rothman’s minority interest in 1995.

In order to sustain operations in the luxury world, Chairman Johann Rupert developed the idea of buying back 30% of the stake at Vendome. If Vendome is kept private, management over the next 10 years would be easier. The buyout was approved in 1998 generating proceeds of $5.74 billion. Vendome was freed of the pressures of the stock market.

In 1999, two of the largest tobacco companies in the world, the British American Tobacco and Rothman’s International, announced a merger. When the merger was consummated, Rembrandt and Richemont owned 35% of shares of the merged company, BAT.

After the merger, Richemont also acquired 60% of the interests of the jewelry house Van Cleef & Arpels. Richemont operated separately of Van Cleef & Arpels to keep their distinct brands.