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Luxury brands leveled the playing field in a big way this year as they shifted the focus of their broader businesses toward their wealthiest customers and away from the middle-class consumers who have fueled their growth over the past decade.
Traditionally associated with the exclusive world of polo, sailing and tennis, luxury houses have piled into sports such as football and basketball, with the number of sponsorship and collaboration deals rising to 96 in 2024, from 19 five years ago, according to data group LuxurySight.
LVMH’s sponsorship of Formula 1 was on full display at the Abu Dhabi Grand Prix in December this year, where the podium was decorated with the Louis Vuitton logo and the track with the logo of Champagne house Moët & Chandon.
The group’s biggest brand, Louis Vuitton, this month became title partner for the Grand Prix of Monaco, and announced a partnership with Spanish football club Real Madrid this summer. LVMH’s next biggest brand, Dior, teased new artistic director Jonathan Anderson’s runway debut with images of Kylian Mbappé, one of the game’s biggest stars.
“Sports is the biggest platform out there, with the biggest audiences. Of course, they want a piece of it, and I think they always will,” said a person familiar with the LVMH houses’ deals. “These brands don’t just sell products – they sell lifestyles. Associating with a top-tier sports franchise gives a lot of people a sense of where they belong.”
In recent decades luxury brands have gone from niche businesses serving the super-rich to global corporations with billions of revenues, requiring a very broad customer base. LVMH, the world’s largest luxury group, has been at the forefront of both the scale and engagement with the sport.
“Today, luxury is no longer a luxury for VIP clients, but a democratized luxury,” said Jonathan Sibony, chief executive of LuxurySight, adding that the size and maturity of the top luxury brands means they need to address a larger customer base to grow. “Sports is entertainment today, and it’s on a global scale… brands want some attention to that.”
But the boost to mass sports comes as luxury groups are refocusing on wealthy customers after years of inflation that has hurt the spending power of middle-class buyers.
“Aspirational models are not being prioritized,” said Alexis Bonhomme of luxury consultancy Trinity Asia. “Growth is now being driven by the highest-spending customers, especially in China and the US as the mid-segment is being squeezed.”
However, the expansion of the audience is what helped Louis Vuitton transform from a family business with a handful of stores in the 1970s to a global powerhouse with estimated annual sales of more than €22 billion.
The question is how the mega brands he leads, each with revenues of more than €10 billion, can continue to grow their categories, and how they can manage the risks of brand dilution as they become more mainstream, including through tie-ups with the world’s biggest sportswear.
The Real Madrid collaboration, in which Louis Vuitton will create formal and travel apparel for the men’s and women’s squads, is the latest in a series of sporting alliances involving LVMH. As well as sponsoring the Paris Olympics, the group is in the first year of a nearly €1bn, decade-long deal with Formula 1 motor racing, which will include several of its brands including Louis Vuitton, drinks division Moët Hennessy and watchmaker Tag Heuer.
Meanwhile, jeweler Tiffany, acquired by LVMH in 2021, has a long-term relationship with the NBA, designing the league’s trophies and collaborating on lines of basketball shoes and jerseys.
Other luxury houses pushing into mainstream sports include Ralph Lauren, which outfitted the U.S. Olympic team for the 2024 Games, Prada, which is the official partner of the Chinese women’s soccer team, and Moncler, which has created off-pitch clothing for Inter Milan.
Erwan Ramberg at HSBC said Louis Vuitton’s deal with Real Madrid “may seem a bit ambitious and low-end to some people, but for others it is the dream and some of these players are absolute stars”. He said that to continue the growth of such a big brand “you have to try a lot of things to see what happens”.
Within F1, the challenge is to stand out among the sea of brands – from KitKat chocolate bars to Heineken beer – who are trying to capitalize on the sport’s growing resonance with Gen Z fans.
Alliances with sports work for luxury because they can be linked to narratives about craftsmanship and high performance, as is the case with Rolex and tennis or Louis Vuitton and Formula 1, according to Bonhomme.
“Done right, they don’t dilute luxury but reframe it in a modern context,” he said. “But scale is a risk… if the campaigns or products lack prestige.”
Additional reporting by Sam Agini
