LVMH Looks To Dig Deeper Into China With Bulgari Acquisition

Bulgari Joins Roster Of LVMH Brands Like Louis Vuitton, Moët et Chandon And TAG Heuer

Bulgari's Pudong location at Shanghai IFC

Bulgari’s Pudong location at Shanghai IFC

This week, luxury juggernaut LVMH announced its acquisition of the family-owned Italian watch and jewelry maker Bulgari, a deal which will the Wall Street Journal notes will see senior members of Bulgari’s controlling family take new roles at LVMH. Aside from taking control of a respected and popular brand, LVMH, through its takeover of Bulgari, will further consolidate its China strategy. In recent years, as China has become the fastest-growing single market for many of its brands, particularly Louis Vuitton, Fendi and Hublot, LVMH has invested heavily in the Chinese market, even going so far as to target home-grown brands for acquisition. In 2007, LVMH purchased a majority stake in the Chinese baijiu producer Wenjun in the hopes of competing with premium producers like Maotai and Swellfun. (The latter of which LVMH rival Diageo has fought to acquire for nearly three years.)

With its acquisition of Bulgari, LVMH will look to harness the momentum that Bulgari has built up in the China market over the past several years. Considering its standing in two of the fastest-growing luxury segments in China — watches and jewelry — Bulgari has expanded quickly into second-tier cities while building impressive locations in top-tier cities. Last summer, Bulgari opened its largest store in mainland China, a 340 square meter boutique at Shanghai IFC, and at the 2010 Reuters Global Luxury Summit, Bulgari CEO Francesco Trapani said the company sought to open a grand total of 15-20 new stores throughout the Greater China (mainland China, Hong Kong and Taiwan) region over the course of the next three to four years, which would mean around four to five new locations annually.

Now that Bulgari can count on the support of LVMH, which is no stranger to massive China expansion efforts, expect to see Bulgari’s China rollout become even more ambitious. Maybe they’ll even follow the lead of LVMH companies like TAG Heuer and Hublot and appoint a local celebrity as the face of the company in China.