The latest blow comes after LVMH, the French luxury goods giant, recently signed a historic sponsorship deal to partner with Formula One.

In the motorsport business, this alone makes a global 10-year deal worth an estimated $1 billion (€0.91 billion) a significant development. LVMH own brands like Louis Vuitton, TAG Heuer and Moët Hennessy will be prominently promoted at Formula One races beginning next year. Similarly, this new era starts just in time to coincide with the 75th anniversary of Formula One to give it even more significance.

This rather brazen strategy fits well into the growing trend of a motorsport market. The timing is ideal for LVMH to capitalize on the passion around motorsports globally, as evidenced by the introduction of new race locations and the popularity of motorsport-focused material such as Gran Turismo, Formula 1: The show Drive to Survive on Netflix, and other documentary many out there, but the one that surprisingly stood out for me was Schumacher.

Both Formula One and the luxury brands within LVMH would benefit even more from the present partnership.

LVMH has been instrumental in the sports sponsorship market for quite some time now and it sponsors top level events such as NFL and FIFA World Cup etc. This year, the luxurious company successfully doubled down in several fields of sport supporting both the Olympic and the Paralympic Games in Paris.

Other than sponsoring events, LVMH has appointed ambassadors of the brand among the most celebrated athletes globally. They have also associated their brand with other giants in the sporting fraternity such Lionel Messi, Roger Federer, Rafael Nadal and Cristiano Ronaldo. Here, the corporation has also showed its concern of diversity in athleticism by supporting other paralympic winners such as Pauline Déroulède, Timothée Adolphe, Marie Patouillet among other athletes.

It shows the broad spectrum of involvement, from remarkable sportsman to motivational paralympian, for which LVMH has a powerful and large impact on the sports world.

In the new partnership, which would see Mercedes Benz as the new team to partner with Formula One, the watch making company, Rolex which has been the official time keeper of Formula One since 2013 would be severed. The respected watch company which has been facing declining pricing and market share issues at the center of a volatile global luxury consumption environment could be severely impacted by the change.

A significant change in luxury brand alliances is indicated by LVMH's foray into Formula One. The ideals that his brands and the racing industry share were highlighted by LVMH CEO Bernard Arnault: “The people, the quest for excellence and the passion for innovation are at the heart of the activity of our Maisons and Formula 1. In motorsport as in fashion, watchmaking or wines and spirits, every detail counts on the path to success.

"Both in our workshops and on circuits around the world, it is this incessant search to break boundaries that inspires our vision, and this is the meaning that we want to bring to this great and unique partnership between Formula 1 and our Group.”

LVMH recently declared that reaching a broader customer base means that it has to embrace trends and embrace those that are more youthful in particular. Old and new are being tried together while using formal suits together with sneakers – the technique that the young people like.

Other details of the deal however are still being closely guarded for now. But the alliance is a species of a gamble in thecontext of LVMH strategies for retaining dominance in the emerging evolutionary luxury goods sector.

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