Free Deluxe: How Luxury Lost Its Luster by Dana Thomas

Montblanc, and Chloé, and is controlled by Johann Rupert, an Afrikaner businessman from Johannesburg, South Africa.
    Richemont began modestly: during World War II, Rupert’s father, Anton, took over a small tobacco factory in Johannesburg with two friends. But after the war, Anton’s entrepreneurial skills took over: he licensed cigarette brands from Rothmans, a well-known London tobacconist and, in the 1950 s, went global. In the 1970 s, Anton bought stakes in Cartier and Alfred Dunhill, which owned Montblanc writing instruments. Like Vuitton at LVMH, Cartier became the cornerstone and cash cow for what would become a luxury group. Cartier added a moderately priced contemporary line called Les Must de Cartier, which fueled growth and expansion.
    In 1985 , Johann Rupert, a banker who had worked for Chase Manhattan and Lazard Frères in New York and had run his own merchant bank in South Africa, joined the family-run firm. At the time the group was growing rapidly: it acquired Chloé, a fashion house known for its hippie-chic clothes, and Piaget and Baume & Mercier watches. In 1988 , partly in response to trade sanctions against South Africa’s apartheid rule, Rupert reorganized the business. He separated the luxury brands from the family’s tobacco and mining assets, moved them to Luxembourg and Switzerland, and became CEO of the new group. He became chairman of Richemont in 2002 .
    Johann Rupert is as elusive as Bernard Arnault is known. He rarely appears in public and grants few interviews. The one time he made headlines in the British papers was for telling Margaret Thatcher to “stop interrupting me while I’m interrupting you.” He travels incessantly, logging seven hundred hours a year on his two company jets. “In order to judge the mood and judge the future, you’ve got to go to the East,” he once said. “You’ve got to go to South America. You’ve got to walk the streets of New York.” He never attends fashion shows. “You are the star,” he explained to Chloé’s chairman Ralph Toledano, “not I.”
    When Rupert visits his brands’ stores, it’s informally: he drops in, unannounced and often unrecognized. He gives his CEOs complete autonomy but knows what’s going on. Though his background is in finance, when he meets with his executives, he talks marketing and strategy, not figures. He looks long-term and rarely sells off his brands or trades them like Monopoly properties when they don’t perform. He invests in them, sometimes quite heavily, and waits however long it takes for the return. Most of Richemont’s sales are in jewelry and watches. “We concentrate on style rather than fashion,” he explained. “We do not want to sell things that we have to discount two times a year.”
    While Arnault and other luxury tycoons were busy snapping up brands in the late 1990 s, Rupert played the game conservatively. He made two major deals: he bought 60 percent of the legendary Paris jeweler Van Cleef & Arpels in 1999 for $ 265 million from the Van Cleef family, and he paid $ 1.86 billion in 2002 for three luxury watch brands—Jaeger-LeCoultre, International Watch Co., and A. Lange & Söhne—from Vodaphone. And he acquired controlling stakes in two smaller companies: Old England haberdashery and Lancel luggage. Rupert received—and turned down—offers by Tag Heuer, Ebel, Chaumet, and Zenith; each in turn was quickly picked up by LVMH. “It’s not just about what you buy,” he explained. “It’s also a question of whether you can support the brands you have when times are bad…In my view, you ultimately create shareholder value better by building goodwill, rather than buying goodwill.”
    Unlike LVMH, Gucci Group, the Prada group, and other luxury conglomerates that clump their brands together to get better prices for retail leasing and advertising and produce their different brands at the same factories with the same workers, Rupert keeps his companies independent of one another.