What comes to mind when you think about the CEO of a high-end watch brand? You’d probably envisage a wise-looking, short, bespectacled Swiss bloke rocking a salt-and-pepper beard and an unmistakable air of superiority. Frédéric Arnault is the opposite of that.
Tall, friendly, open and above all else, astonishingly young, Frédéric Arnault is almost as disruptive as the ultra-successful watch brand he now sits at the head of. When Arnault took the reigns of TAG Heuer back in 2020, he was only 25, the same age I am now. I can’t imagine taking on such responsibility at 25…
Of course, Arnault didn’t just come out of nowhere. As the son of Bernard Arnault (the founder, chairman, and CEO of LVMH, the world’s largest luxury goods company who also happens to be the richest man in the world), Frédéric has been living and breathing business since day dot. Growing up with Bernard Arnault as your dad? That’s a business education money can’t buy.
But Frédéric’s not just some parachuted-in, hapless scion. Indeed, since he took the helm – which, you have to remember, was in the midst of the COVID-19 pandemic, an exceptionally challenging time for the watch industry – TAG has been on a dramatic upwards trajectory, succeeding and continuing to grow at a time when many brands are suffering.
Indeed, Arnault’s championing of the avant-garde has been nothing short of extraordinary. Pushing the boundaries of materials science with lab-grown diamonds; revolutionising the smartwatch space with NFT integration and cutting-edge fitness apps; having the best e-commerce offering in the business, reviving and revolutionising some of TAG’s most underrated designs… TAG has never been more dynamic than under his leadership.
I had the chance to sit down with Frédéric at LVMH Watch Week 2023 in Singapore and pick his brain – young gun to (aspiring) young gun – about how he’s helped TAG thrive where other brands have floundered, and why luxury watch brands need to be in touch with young people in order to survive.
Despite the sweltering Singapore heat, Arnault was cool as a cucumber. You would be, too, if you were the head honcho of TAG Heuer after LVMH Watch Week 2023. TAG was easily the stand-out brand from the show, with a whole swathe of strong releases: the slick Carrera 60th Anniversary, new Connected smartwatches, the sporty titanium Aquaracer Professional 200 Solargraph, and of course, a carbon-fibre reboot of the Monza… It felt like TAG were really going for ‘shock and awe’.
But Arnault was quick to set the record straight on that front during our chat. “Our strategy is that when we launch a watch, you need to tell a story, and it has to be strong,” he explains.
“Actually, we don’t have that many launches, when you think about it. It’s just that each launch is very strong [and] has a very strong story associated with it.”Frédéric Arnault
“In the past, we’d launch probably 30 references, and you would not remember that many. Right here [in Singapore], we’re launching 6. And people will probably remember 2,” he jokes with his characteristic humility.
He makes a good point – perhaps it’s the quality of TAG’s releases from LVMH Watch Week 2023 that’s responsible for that overwhelming feeling. Again, it’s kudos to TAG and Arnault that that’s the impression one’s left with.
The revival of the Monza was a particular highlight of the show, and Arnault told me it’s easily his favourite of the new releases. It’s not hard to see why: it’s both extremely youthful and extremely high-tech all at once.
Of course, TAG Heuer has always been intimately associated with the world of motorsport. But when you consider how popular motorsport (and particularly Formula 1) has become among young people around the world – the so-called ‘Drive To Survive effect’ – releases like the Monza, TAG’s recent partnership with Porsche and their doubling-down on their relationship with Red Bull Racing all seem laser-focused on attracting a younger crowd.
“When I joined the brand, motorsport was more associated with our heritage offerings,” Arnault says. “People would say, “oh, it’s not a modern sport, the future is soccer”. And I thought, well, even if soccer has a larger follower base, it’s not a tactic for us.”
“Let’s focus heavily on motorsports and make it not only our heritage but part of our presence, and also part of the future… That’s when we accelerated the developments with Red Bull Racing, and tried (and succeeded!) in doing a deal with Porsche.”Frédéric Arnault
TAG’s timing could not be better. Porsche has never been more popular, having recorded their best sales year last year and notched more successes in motorsport. In F1, Red Bull’s Max Verstappen – who’s rarely seen without his TAG Heuer Monaco – became World Champion in both 2021 and 2022. It’s all rubbed off on TAG, Arnault relates.
“We’re seeing a younger audience that is very interested in motorsports. It’s becoming much more female as well. There are women now that love the sport; love the drivers. And yes, it’s bringing a lot of traction to the brand… We are lucky because we’ve been World Champions in the past two years.”
“We can say we’re visionaries because we knew that [Red Bull] was gonna make it,” Arnault jokes. “We have the best team principal, the best team, the best drivers. But clearly, it’s helping drive interest in the brand.”
Motorsports isn’t the only avenue through which Arnault and TAG are going after young consumers. One only has to look at some of the brand ambassadors TAG has signed under Arnault’s leadership: Félix Auger-Aliassime, Jacob Elordi, Naomi Osaka, Sky Brown… Young stars for a youthful brand.
Getting into the NFT space was also another canny move on Arnault’s part, and one clearly aimed at attracting a younger crowd to the TAG Heuer brand.
“We always want to be avant-garde and be the first in launching innovations and new products,” Arnault says, adding that “there is a natural fit between the world of NFTs and our positioning; our smartwatches.”
“When you purchase an NFT, that has a certain value, the collector will want to display it in a very special way. [Our] product is the best way to display [your NFTs].”Frédéric Arnault
It’s pretty genius, actually. By making the TAG Heuer Connected the must-have watch for NFT owners, Arnault and TAG have tapped into a young, passionate, wealthy audience who understand the value of alternative asset classes. Start ’em off with a smartwatch, and then they’ll invest in a mechanical TAG later down the track – and Arnault says he’s got plenty of sales data to suggest that’s already happening.
Despite the recent NFT market crash as well as the collapse of FTX, Arnault remains confident about the NFT space.
“So I’m not surprised that this happened. And we thought in the space, it was gonna happen eventually. Because there was clearly too much speculation, too much hype in valuation of companies that were not created with real figures and business. And clearly, the FTX crash has generated a huge new ‘crypto winter’… [But] I still believe in the fundamentals of the technology, and of the benefits of NFT in the long term.”
“Even though the value has decreased for some of the key collections, it’s still quite high, and there’s still a strong community around it of people that are really passionate and committed… We see the figures because, with our NFT viewer, we know how many people are here. And actually, it’s continuing to grow. So we’ll continue to invest there, for sure,” Arnault commits.
He points out that blockchain technology has obvious benefits when it comes to authenticating timepieces: “this is something we’re working on: certificates of authenticity, of ownership, the traceability… [I] won’t say specifically what technology it’ll be… But [blockchain] will be the underlying technology that we’ll be using.”
The other thing Arnault and TAG Heuer are investing in are their watchmakers: getting fresh blood into the business to make sure they can continue pushing boundaries for another 160-plus years. For Arnault, it’s crucial that young people get involved not only with watches but in the watch industry – just like he has.
“We see a strong appeal from the young generation to the watch industry – which is why I think now, even more, it’s important to have a very authentic story.”Frédéric Arnault
Arnault points out that young people have a fundamentally different attitude towards watches than previous generations, whether they’re shopping for them or making them.
“Younger generations are looking for great designs rooted in heritage, real technical credits – they have access to all [the] information so we can’t lie about anything. The brand has to be credible and legitimate. And they’re much more demanding probably than in the past.”Frédéric Arnault
“You know, 20 years ago, everyone had to have a watch because we needed to tell the time. Some people lived the transition: for them, it was a tool, and now it’s more of an extra product, but they knew the time when it was a tool.”
“If you’re getting the younger generations, [watches] were always a luxury product for them. Rather, they always looked at it just through the prism of a ‘passion object’ that has to be associated with very, very strong emotional value.”
Much has been said about Arnault’s age (and family name) when he took the reigns at TAG, but it’s clear that having a CEO who intimately understands how to appeal to young people has been, and will continue to be, crucial to TAG’s ongoing success.
Right now, Arnault’s focus is making sure the business continues to bounce back after the disruption of COVID – although he shared with me that COVID actually came with some of its own benefits for TAG.
“In COVID, there was a lot of uncertainty: how’s the purchasing power going stay, how is the interest in watches going to evolve… We saw that actually spiked: people wanted to purchase watches, and the real issue was the supply chain,” he explains.
“I saw it as an opportunity. Because when we don’t have the product, then we create demand. And so I see it as an opportunity to increase the desirability of our pieces and the brand overall in the long term. Yes, it’s painful in the short term, but it has some longer-term benefits.”Frédéric Arnault
You can see that approach in the kinds of pieces TAG has been releasing over the last few years: far more limited, far more experimental, not the sorts of things you might expect from TAG… And it’s all been working. There’s never been more hype around TAG Heuer than in 2023, and Frédéric’s to thank for that. We’re just interested in seeing where they go next…