Luxury business model innovation

The luxury industry confronts a multifaceted environment; however, luxury brands consistently deliver exceptional results. The resilience of French luxury firms can be attributed to their creative skills, often nurtured by their close ties to the art world. Through artification processes like art patronage, collaborations with artists, and the integration of artistic elements into their products and branding, luxury brands enter the cultural sphere of artworks, strengthening their value proposition and differentiating themselves in the market. The research focuses on the innovative potential of artification in luxury business models, with a particular emphasis on the wine and spirits sector, exemplified by LVMH's flagship brand. Hennessy leveraged artification to navigate the challenges of the Cognac market and maintain its resilience in the face of declining alcohol consumption. The authors investigate how a luxury company ensures innovation across the components of its business model (BM) through an artification strategy. They explore how Hennessy's associations with art and artists modify its value proposition, transform its value architecture, and impact its value capture. Their qualitative analysis highlights the role of artification in fostering BM innovation, demonstrating its effectiveness in creating and capturing value within the LVMH conglomerate.