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Why LVMH Is Going Bigger in Texas

Race winner Max Verstappen celebrates during the F1 Grand Prix at Circuit of The Americas.

Race winner Max Verstappen celebrates during the F1 Grand Prix at Circuit of The Americas.Photo: Bryn Lennon via Getty Images

During this month’s Formula One race in Austin, Texas, regional clients of Tag Heuer and Louis Vuitton were invited to an exclusive air-conditioned lounge, where perks included unlimited champagne, lobster tail and front row seats above the pits. Special guests included Louis Vuitton brand ambassador and Olympic swimmer Léon Marchand, who won five medals for France at last year’s Paris games, NBA champion Tony Parker, and Dallas Cowboys chief brand officer and co-owner Charlotte Jones.

While luxury boxes are a standard fixture at sporting events, this lounge was different: it was the first time that multiple LVMH-owned brands joined forces in this way, offering a glimpse of what’s to come under LVMH’s 10-year F1 sponsorship. Combining the individual investments of the maisons with the expertise of the group enables the company to “further grow the experiential dimension of Formula One”, LVMH Watches CEO Frédéric Arnault said when the news was announced in October 2024. This means that now, in addition to an oversized Tag Heuer clock, magnum bottles of Moët & Chandon champagne showering the drivers and a Louis Vuitton trophy trunk for winner Max Verstappen, an LVMH logo has joined the spotlight, setting a new template for how the once behind-the-scenes parent company is shaping its own public identity.

The location for this first iteration isn’t a coincidence. Texas is the third largest state in the US for LVMH in terms of sales after New York and California. It’s also the location for LVMH’s ongoing “Made in the USA” push under President Trump, having begun in 2019 with a manufacturing facility in Alvarado (two production facilities already operate in California). With tariffs top of mind and an administration particularly vocal about national pride, it is in the company’s best interest to engender goodwill in the US’s largest state. The group is also trying to cut costs and attract new customers amid a wider industry slowdown that is only barely, recently, showing signs of a rebound. So even though the effect of LVMH at Formula One was extravagant, the motivations were all the more sober.

For its 10year global partnership with Formula One LVMH plans for more of its brands to have a visible presence at the...

For its 10-year global partnership with Formula One, LVMH plans for more of its brands to have a visible presence at the races in the coming years.Photo: Courtesy of LVMH

Formula One is part of a broader strategic priority for the company, says Anish Melwani, chair and CEO of LVMH North America, who joined the weekend’s festivities. “This is how to be in the places where you have the ability to create common culture across different audiences and in that process, recruit — but also to elevate and build desirability among existing clients,” he says.

Shared culture and the Olympics template

Considered a bellwether for the industry, LVMH has faced a few quarters of lackluster results. The week of the F1 race, things were looking up: revenue from its fashion and leather goods division fell only 2% in the third quarter of the year, compared to a 9% drop the previous quarter. (Overall group sales were up 1%.)

Tariffs mean that higher prices on some goods, like watches, are likely. Its wine and spirits division is especially exposed, transitioning to a 15% tariff, and unable to transfer to domestic production. “We can’t move the price on Hennessy without a massive demand disruption,” Melwani says. “That’s the argument that every business group made to the administration: we can pay it, but it then affects our ability to reinvest.”

So as the company seeks a return to growth, it is looking to grow its customer base. “On the trajectory of soft luxury, the average basket hasn’t changed so much,” said chief financial officer Cécile Cabanis, during LVMH’s most recent earnings call. “So we are really looking at traffic and volume when it comes to improvement.”

That’s where F1 comes in. Its growing global audience, thanks in part to the success of Netflix series Drive to Survive, is increasingly female, with a relatively high affinity for fashion and beauty. Formula1.com has seen a 73% increase in total unique female visitors, with a 670% increase among women aged 25 to 34, according to media analytics firm Comscore. F1’s social media audience is highly more likely to engage with fashion and beauty brands like Victoria Beckham (40 times the average) and Tiffany & Co (23 times the average) than other categories. The number of active apparel brands in F1 has doubled since 2018, according to research firm SponsorUnited, including Charlotte Tilbury, Boss, Lululemon and Tommy Hilfiger.

SirDavis whisky a firstofitskind joint venture between Moët Hennessy and Beyonc KnowlesCarter introduced in 2024 is...

SirDavis whisky, a first-of-its-kind joint venture between Moët Hennessy and Beyoncé Knowles-Carter introduced in 2024, is finished, blended and bottled in Texas.Photo: Courtesy of SirDavis

Melwani says that to grow its customer base and foster cultural relevance, LVMH looks for shared moments of culture. “If you take a step back, these things” — he holds up his smartphone — “are ruining society. We know that that’s a pretty established fact, at this point. One of the reasons it’s problematic is because what each of us watch on these devices is almost totally different from each other. So therefore it’s very, very hard to build cultural desirability through this,” he explains. “We need shared points of culture in order to build cultural relevance and therefore long-term desirability — that’s the business that we’re in — so Formula One is one of the remaining places for shared culture and [the fact that] younger women are coming into the sport, that’s a key part of it.”

LVMH has begun approaching moments like this at a group level, breaking with tradition to promote individual brands. This strategy was prominent during the Paris Olympics — in addition to opening ceremony suits from Berluti, Chaumet-designed medals, athletes dressed in Dior and Louis Vuitton, and Moët Hennessy-stocked events — LVMH itself hosted a hospitality townhouse on Rue du Faubourg Saint-Honoré.

Formula One is building on this template, creating efficiencies in terms of shared event venues, guest lists and experiences. On the Thursday leading into the race weekend, Tag Heuer hosted a private party at its new Austin store, which opened in June, with sales that surpassed expectations. The F1 partnership is working especially well for the luxury watchmaker, Melwani says. (Tag Heuer’s F1 relationship goes back to a Ferrari sponsorship in 1971.) At the track, Tag Heuer collectors joined Louis Vuitton clients in private track-side “photo safaris” and paddock tours, cooling off and dining together in the shared suite.

LVMH plans to build on this approach with subsequent races. The Austin race was just extended through 2034, and there are 24 races a year. Unlike with the Olympics, LVMH has 10 years to finesse its approach. “Whenever we see something that is expanding the tent that can be accessed, that’s interesting to us,” Melwani says.

Made in the USA, in Texas

The crowd in Austin reached 450,000, and it’s one of the best-attended F1 events. But Texas is important to LVMH beyond F1. Texas’s business-friendly climate and lower taxes now attract those including Apple, Tesla and Charles Schwab. LVMH has about 100 boutiques across the state, having opened 10 new retail locations in the past year. Dallas’s Dior boutique was one of only two locations to open a Dominique Crenn-led restaurant (the other is in Beverly Hills), and Houston is the homebase of a joint venture between Beyoncé and SirDavis whisky. LVMH also has a distribution center and a client service center in Texas.

Louis Vuittons Rochambeau is a Texasbased leather goods facility on the site of a former ranch. President Donald Trump...

Louis Vuitton’s Rochambeau is a Texas-based leather goods facility on the site of a former ranch. President Donald Trump and LVMH CEO Bernard Arnault attended its ribbon-cutting in 2019.Photo: Courtesy of Louis Vuitton Melletier

“For a very long time, Texas has been a luxury epicenter,” Melwani says. “Our biggest brands are in multiple cities in Texas.” Austin, specifically, has seen an influx of wealth, having grown its millionaire population 110% in 10 years. “If you take the 25-year trend, Austin has just grown. It’s not a boom-and-bust cycle,” he adds.

Texas is also the largest cattle-producing state, with a cowboy culture known for leatherworking. This heritage comes in handy for a European luxury goods giant hoping to merge savoir faire with Made in the USA. “If you look at the history of Louis Vuitton manufacturing, specifically, and luxury manufacturing more broadly, it’s about being the places where people have been doing the thing for a very long time, because that’s where you get that true artisan heritage,” Melwani says. “Sometimes, we go to places where it used to be and help to bring it back.”

An April report suggested that training local workers to design for Louis Vuitton was initially challenging. Former employees of the Texas workshop told Reuters that the facility was underperforming compared to others. In response at the time, Louis Vuitton industrial director Ludovic Pauchard said that opening any factory is challenging, adding that some of the issues raised in the report dated back to 2018.

Six years in, the company sees promise. In July, LVMH chair and CEO Bernard Arnault announced that a second such workshop is slated to open by 2027.

LVMH’s fashion and leather goods business has struggled in the first part of the year (attributed to sales declines in Asia). Meanwhile, leather goods, including handbags, were among the hardest hit by Trump’s tariff war. Leather goods coming out of Texas escape tariffs, aside from the imported materials. And for now, that includes leather.

That could change, Melwani says. “To have leather at the quality that we need, you have to be thinking about the entire life of the animal. We don’t brand an animal if you’re going to use the leather, for example.” The company typically works with local farmers and ranchers (who raise cattle for meat) to train them on how to care for the hides of the animal as they are raised, so this could be on the longer-term roadmap for Texas.

“The location is always based on some heritage that exists, and then it’s a question of how you end up tapping into that heritage, and it takes time,” he adds. “We are still relatively early in this journey of Texan manufacturing — just six years in. On the scale of Louis Vuitton and luxury, that’s a short amount of time.”