LVMH, the luxury goods conglomerate based in Paris, experienced an 11% decline in its spirits division sales in the first nine months of 2024. This drop was mainly attributed to the weak demand for Hennessy Cognac in China. However, there was a silver lining as Hennessy saw growth return in the US market during the second quarter.
The Cognac & spirits division of LVMH reported a 11% organic sales decrease to €2.05 billion, while the Champagne and wine arm fell by 6% to €2.14 billion. Overall, wine and spirits sales saw an 8% decline in the first nine months of the year. Looking at the third quarter specifically, sales fell by 7%, following a 5% decrease in the second quarter and a 12% drop in the first three months of 2024.
Hennessy faced challenges in China due to weak demand and caution among retailers. However, the brand managed to bounce back in the US. In an effort to expand its portfolio, LVMH’s wine and spirits division, Moët Hennessy, collaborated with Beyoncé Knowles-Carter to launch a new American whiskey brand called SirDavis.
Despite the decline in wine and spirits sales, LVMH’s perfumes and cosmetics division and selective retailing segment showed organic growth. The company’s total revenue remained steady at €60.8 billion for the first nine months of the year.
Looking ahead, LVMH plans to focus on enhancing the desirability of its brands by emphasizing authenticity, product quality, distribution excellence, and organizational agility. The conglomerate also owns other spirit brands such as Belvedere Vodka, Volcan de mi Tierra Tequila, and Scotch brands Ardbeg and Glenmorangie.
Moët Hennessy made changes in its leadership by appointing Julie Nollet as the managing director for the UK and Ireland. However, GlobalData cautioned that tariffs on EU brandy imports could significantly impact the competitiveness of the category in China. This could have a notable effect on leading brands like LVMH, Rémy Cointreau, and Pernod Ricard, known for producing Martell Cognac.
In related news, WhistlePig introduced Boss Hog, a whiskey infused with Indian spices, while concerns were raised about the potential impact of EU brandy tariffs on market share. Additionally, Moët Hennessy made strategic moves by hiring a new managing director for the UK and Ireland, signaling a focus on strengthening its presence in key markets.