Arnault shows an elegant comportment backed by years of preparation for his role in the public eye (Photo: Paulius Staniunas)
Although it was certainly news when the then 25-year-old scion of the Arnault family, Frédéric, took the helm of TAG Heuer, the watch industry was less concerned about his age than what he was going to do in his new role. Despite its 167-year history, the LVMH-owned TAG Heuer has not quite aged in the way one would have expected — instead, it has become increasingly youthful as the years go by, with a penchant for innovation driving much of its almost futuristic personality. A young CEO is not particularly surprising in this case.
Arnault’s predecessor Stéphane Bianchi has much to do with the company’s enviably healthy outlook — before moving on to a larger role within the LVMH family, he cemented TAG Heuer’s reputation as one of the world’s most exciting watch companies, continuing the good work that industry veteran
Jean-Claude Biver had done before him. Arnault was inheriting an already successful global brand with an impeccable track record, as well as a strong product range that serves the needs of a wide consumer base. All he needed to do, technically, was not mess things up.
He did quite the opposite — he grew the brand even more.
Releasing an NFT-compliant watch and signing on actor Ryan Gosling as ambassador may have been his biggest moves at TAG Heuer, but some of Arnault’s most critical decisions were related to staffing. Among his most eye-widening hires were Cartier’s legendary high complication specialist Carole Forestier and Rolex’s movement director Emmanuel Dupas, who few people thought would ever leave their posts. He also successfully poached Richemont stalwart Edouard Mignon to be TAG Heuer’s new head of innovation and convinced former watch specialist for Christie’s and Bonhams, Nicholas Biebuyck, to oversee the heritage department. We cannot imagine saying no to working for a company like TAG Heuer, but does one really indicate anything but the affirmative to an Arnault?
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He laughs. “Watchmaking is our core know-how and it is important to invest in our team. We are developing our R&D with some key talents like Carole and Emmanuel. They have already worked on some of our new projects, and many more that we cannot talk about yet,” Arnault smiles, and it is all we can get out of him on the subject.
We do better when discussing TAG Heuer’s watches, especially the collection that was released at this year’s Watches and Wonders showcase in Geneva, Switzerland. Its most significant releases were in the Aquaracer family — arguably the industry’s most recognisable diving watch, and a major pillar for the brand. Powered by the energy of the sun, the Solargraph — the first of its kind for the maison — was the most fascinating in the range, even though true-blue explorers of the deep may be more interested in the luxurious Professional 1000 Superdiver or the Professional 300 Orange Diver. Meanwhile, the iconic Monaco Gulf staged a comeback with the in-house Heuer 02 movement at its heart, while the maison’s partnerships in the world of cars and racing were honoured with the Carrera x Porsche Limited Edition.
While some CEOs may baulk at picking a favourite watch or watch family, Arnault has no qualms whatsoever in doing so — it is most emphatically the Carrera, which this year welcomed a revolutionary model that features the innovative Diamant d’Avant-garde technology and a disruptive design. “We wanted to innovate in the precious stones space, so we investigated lab-grown diamonds,” he says. “Our vision is not to replace natural diamonds, but to take the opportunity to do something new that has never been seen before. It is the beginning of a new chapter for TAG Heuer.”
The TAG Heuer Carrera Plasma, powered by the Heuer 02 Tourbillon Nanograph movement, has Diamant d’Avant-Garde lab-grown diamonds set in the case, and features embellished indices and a single stone on the crown. The shimmering effect on the polycrystalline diamond dial plate is a sum of crystals being grown as one, and is fitted within a 44mm sandblasted anodised aluminium case.
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Naturally, as CEO, Arnault has the luxury of opting for whatever watch from the maison’s arsenal that he pleases. His choice for the day is the Carrera x Porsche from two years ago — “it fits me so perfectly,” he says, showing it off proudly. And for the instances he takes to the greens, he calls on the technologies of the Connected Golf Edition. We imagine that he would not say no to the Only Watch Carbon Monaco, an all-carbon timepiece that pays homage to the storied Monaco Dark Lord.
As its name indicates, the watch went under the hammer for the 2021 edition of Only Watch, a biennial charity auction of luxury timepieces made by the finest watchmakers to raise funds for research into Duchenne Muscular Dystrophy. “There was a lot of demand for that watch,” Arnault recalls. “We pushed the concept to the extreme, from its carbon case to the hairspring. Next year’s Only Watch will be even more special.”
For those without the wherewithal to acquire such a limited-edition timepiece, the alternative is the Monaco Dark Horse, unveiled this year to mark the start of the Monaco Grand Prix. Formula One Grand Prix racing is a sporting event that TAG Heuer has been a part of for many years. The conversation meanders to the races, his love for it and his favourite racer on the grid at present: unsurprisingly, it is brand ambassador Max Verstappen, who is on the Red Bull Racing team.
“The Formula 1 x Red Bull Racing is a gorgeous watch and, due to Verstappen’s success, is doing very well,” says Arnault. A huge fan of the sport, he follows the Red Bull Racing driver’s career very closely. “I like his competitiveness, that he will do what it takes to win. He is very passionate and so young, I think he will really grow in the years to come,” he says thoughtfully.
Sounds a bit like he is describing himself, really.
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Tall and slender with an athlete’s physique — as one does, when one regularly plays tennis with the likes of Roger Federer and Félix Auger-Aliassime — Arnault shows an elegant comportment backed by years of preparation for his role in the public eye. A graduate of the prestigious École Polytechnique in Paris with a degree in applied mathematics and computer science, he interned at Facebook and McKinsey & Co before joining TAG Heuer as head of connected technologies. Upon his arrival, Bianchi was tasked with grooming the young scion to one day head the company.
It appears that Arnault’s youthful brashness may not have sat very well with the former CEO in their initial days of working together, although the two soon found common ground. In a New York Times article, Bianchi said, “We clashed everywhere in the beginning. But now, we laugh about it. You can have a big brain and not be a leader. He has both.”
Arnault’s was no surprise appointment as he has always had his eye on the prize, having received a TAG Heuer as a gift when he turned 18. “I always knew I wanted to work in the business,” he admits. “TAG Heuer was my first watch, and I love the values of the brand. When I joined, it was because of an available opportunity, and I saw the chance to transform the brand for the future. I was very motivated by that chance.”
Two years into his role — he took over from Bianchi in the tensest months of the pandemic in 2020 — Arnault is proving his mettle. Since assuming the reins, he has reversed what might have been a dip in sales resulting from Covid-19, spearheading the release of cutting-edge timepieces, establishing partnerships with the likes of Porsche and Gosling and, pivotally, plying the risk-infested waters of the metaverse.
While some of these were Arnault’s doing, he was also successfully driving a plan that was already in motion. “About three years ago, we started a change in global brand strategy, with a key objective being brand elevation — how we can increase desirability of the brand and our products, targeting the younger generation. It had many implications, including fewer references, improving the investment value of our watches, strengthening partnerships in industries where we have a presence and even relooking at distribution.”
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TAG Heuer’s involvement in cryptocurrencies and NFTs is a signature move of Arnault as CEO. “It’s a hot topic but we are being quite cautious. The first thing we did was the obvious one, which is accepting crypto as payment for our watches — we believe it’s a great service for our customers. The second thing we did was not to build our own collection of NFTs or create our own communities, but talk to people already in the space and offer them a service — that is how we developed the NFT viewer on our Connected watch, which is the only one that can do this. When you have an NFT worth hundreds of thousands of dollars, you would want to showcase the artwork on a watch that means a lot to you. It also works with our positioning as a luxury smartwatch.”
This segues into his other signature move: growing TAG Heuer’s smartwatch segment, which at present constitutes about 15% of its total sales. “Smartwatches are very important to us and it’s a point of differentiation in the industry. It is additional business as it brings in new customers, whom we can even redirect to traditional watches at some point. Our core business will always be focused on mechanical watches and that is where most of our efforts go, but there are strong investments in smartwatches too.”
He stops and thinks for a second before circling back to the NFT topic. “We don’t take any risks as a brand because we don’t own any cryptocurrencies. There are no NFTs we own, nor do we retain the responsibility of maintaining their value. When a customer displays an NFT, he buys it elsewhere and is only showing it on his watch.” What about the risk of affiliation? “We talked to the people knowledgeable about the space and didn’t see any rejection of us getting into it. It doesn’t discourage buyers of our watches, even our smartwatches, which have many other functionalities anyway.”
The main challenge that is facing the luxury industry’s golden boy at the moment is availability — there simply aren’t enough watches on the market. As one of the most covetable brands in the industry, TAG Heuer is especially affected by this as demand far outstrips supply.
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“We are short on a lot of pieces,” Arnault admits, rubbing his chin ruefully. “But we are trying to mitigate this by working to reduce the waitlist on key pieces. We are going to accelerate production next year to cater for increased demand. It is not our desire to make the customer wait too long for a watch. We are growing our production numbers year on year, so the volume will increase, although that is not the main growth driver for us.” He says the demand is equal for all model families, with the Carrera doing especially well since Gosling came on board as ambassador.
Like all incoming CEOs, Arnault set himself a target when he took on the role. Well before the intended deadline, he has surpassed it. In what ways, we ask. “Numbers, because when you run a business, that is what you look at,” he replies, counting off on his elegant fingers. “To fund innovation, you need money. The average price of a TAG Heuer watch is growing, we see that some of the developments are popular, the connected watch is growing in popularity. We are just ticking a lot of boxes.”
He looks at his watch thoughtfully, and smiles. “As CEO, I hope to really identify some defining moments for the brand and launch key partnerships that are here to stay, like with Porsche, as well as key products that will stay for a long time to come. I also hope to hire great people and build a culture of excellence that will sustain and foster creativity so [that] TAG Heuer is unique in the watch industry. I am very lucky to run such an amazing organisation, and I love coming to work every day.”
This article first appeared on Nov 21, 2022 in The Edge Malaysia.
