The Maharajah and the Lighter -
The Story of Cartier and Richemont
By Su JiaXian
According to the infamous list published annually by Forbes magazine, South African Johann Rupert is worth $3.8 billion, much of it stemming from his controlling stake in Compagnie Financière Richemont SA, the Swiss-based holding company that owns a string of luxury brands. The foundations of Richemont were laid in the seventies, when the once great jeweller Cartier was losing its lustre, only to be rescued by a most unexpected object - the humble cigarette lighter.
Johann Rupert, Executive Chairman, Compagnie Financière Richemont SA
Photo courtesy Richemont
Cartier was founded in 1847, beginning as an upscale jeweller, before evolving into a vertically integrated company that produced and marketed exquisite jewellery, with a clientele that spanned the globe and included kings, pashas and maharajahs. From its original location in Paris the company soon expanded into London and New York, with each of the three Cartier brothers, Pierre, Louis and Jacques, overseeing one location - a move that would prove to be the company’s undoing.
Although united by a common name, each of the three stores went its own way; by the mid-20th century the fragmentation was complete and painfully obvious to the customer. London and Paris continued to create traditionally styled products, but Cartier New York took a more modern approach. As a result, “some world-travelling Cartier customers came to regard the New York store as shamefully déclassé”, according to a 1976 article in Time, which continued by quoting a Cartier customer who proclaimed, “[Cartier New York is] trying to appeal to the American secretary”.
After the death of the last surviving brother in 1964, the Cartier heirs sold the separate operations sold to various investors, which further exacerbated the steady decline of the Cartier name. But Cartier would soon find its saviour in the form of Robert Hocq and his cigarette lighter.
Hocq created the world’s first gas cigarette lighter in 1953. Soon, his company, Silver Match, became the world’s leading manufacturer of lighters, selling millions annually. In the 1960s, Hocq came up with the brilliant idea of a luxury lighter and approached several Parisian jewellers including Van Cleef et Arpels which turned him down; ironically Van Cleef et Arpels is today is owned by Richemont. Eventually, Cartier took up the concept and Silver Match became the official licensee for the first Cartier lighter - a sleek, fluted design in gold plate which first appeared in 1968. The man in charge of the luxury lighter venture at Silver Match was a young Alain Dominique Perrin .
Very quickly the Cartier lighter became the status symbol of choice across the world. Sales soared to the hundreds of thousands by the 1970s. With the Cartier brand foundering, Hocq and French banker Joseph Kanoui put together a consortium that included Anton Rupert of South Africa, which acquired Cartier Paris in 1972, followed by London business two years later and Cartier New York in 1979. Eventually they were merged to form Cartier Monde with Hocq as chairman.
The stroke of genius that turned Cartier into the brand it is today came in 1973, when Hocq and Perrin created Les Must de Cartier - “you must buy a Cartier” - a line of affordable products. The line began with the humble lighter but soon grew to include pens, watches, leather goods and sunglasses - these items were and still are a far cry from what Cartier created during its heyday in the few decades after its founding but they sold by the millions. Les Must de Cartier democratised the ultra-luxury of the Cartier name, making the Cartier myth accessible to a larger market; Cartier was no longer confined to maharajahs, secretaries could afford its products too.
Eventually Cartier Monde and Les Must de Cartier were merged into Cartier International SA with Perrin as the Chairman, where he remained for nearly two decades. Les Must de Cartier products dominated the combined company’s sales, with revenue from those products alone exceeding a billion dollars by the 1980s; because of its sheer size and profitability, Cartier soon became the dominate force in Vendôme and later Richemont, much to the discomfort of the other brands in the group.
The Rupert family, whose fortune originated in the Rembrandt and Rothmans tobacco companies, eventually bought out the rest of the Cartier shareholders. Although the Ruperts controlled other luxury names like Piaget, Chloe, Hackett and Alfred Dunhill, none were anywhere near as successful as Cartier. In 1993, Cartier was merged with the other brands controlled by the Ruperts, creating the Vendôme Luxury Group. That became the base on which they built the Richemont luxury goods empire, which now encompasses sixteen brands including Montblanc, Jaeger-LeCoultre and Panerai. Yet the legacy of the company’s origins remain in the form of a lucrative stream of income - slightly over EUR600 million in 2007 - earned from its 19% stake in British American Tobacco (BAT), acquired when Rothmans and Rembrandt were merged into BAT.
Till this day Cartier continues to be the main contributor to the bottom line at Richemont. In 2001, Alain Dominique Perrin was duly appointed CEO of the Richemont group - Cartier had made him king. But two years later, with Richemont shares sagging in a poor economic climate, Perrin was retired and pushed upstairs to the Richemont board of directors. Joseph Kanoui retired from Vendôme in 2000 when it merged with Richemont. But the man who invented the lighter that began it all, Robert Hocq, was struck by a car outside his Place Vendôme office in 1979 and never lived to see how far his creation would go.
Alain Dominique Perrin, Executive Director, Compagnie Financière Richemont SA
Photo courtesy Richemont
Thirty years on, Cartier’s influence in Richemont is waning as brands like Montblanc grow in size and profitability, though none will eclipse Cartier for some time yet. The current CEO of Richemont, Norbert Platt, ran Montblanc from 1987 to 2004; his achievement nearly rivals that of Perrin, Kanoui and Hocq with Cartier - Platt turned Montblanc from an obscure Hamburg-based penmaker into a global luxury brand that is now the second-largest brand in Richemont.
The old guard of Richemont, personified by men like the late Günter Blümlein, Henry-John Belmont and Franco Cologni, is also fading away. Many of the brightest stars in the Richemont universe are run by a new generation of ambitious executives like Georges Kern of IWC and Jerome Lambert of Jaeger-LeCoultre, each of whom undoubtedly harbours a desire to run Richemont one day.
More recently Richemont announced its intention to spin off its tobacco and non-luxury goods businesses, thus turning itself in a “pure play” luxury company, which the stock market will hopefully value at a higher multiple. Once that is complete, Richemont will finally be liberated from its origins - who remembers the Cartier light today anyway?
Cartier, press material and http://www.cartier.com
Polyflame Europe, http://en.polyflame.com/index.php?ID=1010162
Compagnie Financière Richemont SA Annual Report 2008
Reif, Rita (3 April 1994). Cartier Hunts Its Own Eggs And Other Old Treasures. The New York Times.
--------- (22 March 1976). Nonfamily Reunion. Time.
Perrin, Alain Dominique (11 August 2002). Executive Life: The Boss; A Castle and a Vineyard. The New York Times.This message has been edited by SJX on 2008-06-06 23:17:34 This message has been edited by AnthonyTsai on 2008-06-09 20:55:06