World's most famous champagne company in crisis after hiking prices and slashing jobs
Moët Hennessy, the makers of legendary Dom Pérignon champagne and Hennessy cognac, made a loss of €1.5 billion ($1.68 billion) last year, the Financial Times reported.
The company's sales fell 9 percent in the first quarter compared to the same time last year.
It is quite the downfall for the wine and spirits maker, which made over €1 billion in cash in 2019.
It comes after Moët Hennessy, which is owned by luxury goods giant LVMH, aggressively raised its prices.
Moët Hennessy has hiked it prices by well over a third, on average, since 2019, according to FT analysis.
The company's financial position is so dire that it announced earlier this month that it would cut 10 percent of its workforce, around 1,200 jobs.
It has been hit hard by a global slowdown in alcohol consumption since the pandemic.
However, sources told the FT that the company's problems were largely down to missteps made by former CEO Philippe Schaus.
Those familiar with the matter told the publication that Schaus became too obsessed with turning a profit by raising prices and failed at his push to sell more directly to the consumer.
At a presentation in February last yea,r Moët Hennessy bosses were given a stark warning: 'Need to save cash!', according to materials viewed by the FT.
Last month the brand's new CEO, Jean-Jacques Guiony, who took over from Schaus in February, told executives that sales would not bounce back anytime soon.
Insiders told the outlet that a series of expensive acquisitions had also contributed to Moët Hennessy's woes.
Since 2021 the company has spent €2 billion on an acquisition spree. This includes buying a 50 percent stake in Jay-Z's champagne brand Armand de Brignac, Provencal rosé brand Minuty and Napa Valley winemaker Joseph Phelps.
One source said that by and large the deals had 'added complexity, lowered margin and drained cash.'
Although Moët Hennessy does not have plans to sell the brands it has bought, it is looking to scale back growth.
Moët Hennessy makes legendary Dom Pérignon champagne and Hennessy cognac
'These businesses have been driven by an ambition that is very difficult to accommodate today,' Guiony said earlier this month.
'We have been planning to develop in many geographies at the same time, which is in my view a mistake,' he added.
Moët Hennessy's plans to grow its direct to consumer business has also fallen short.
Under Schaus, Hennessy stores were opened in China and a Veuve Clicquot outlet opened at Parisian department store.
Dom Pérignon and Veuve Clicquot cases were also sold online.
However, the initiatives are now losing the business millions of euros per year, the FT reported.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
an hour ago
- Reuters
Intralot to buy Bally's International Interactive unit in deal valued at 2.7 billion euros
July 1 (Reuters) - Greek gaming firm Intralot ( opens new tab said on Tuesday it would acquire Bally's (BALY.N), opens new tab International Interactive business in a cash-and-stock deal, valuing the unit at 2.7 billion euros ($3.18 billion). The deal will expand Intralot's presence in the UK online gaming market and strengthen its technology offerings by incorporating Bally's digital and casino platforms. The deal, expected to close in the fourth quarter, includes 1.53 billion euros in cash and 1.14 billion euros in newly issued Intralot shares to Bally's shareholders. Following the deal, Intralot's founder Sokratis Kokkalis will retain a significant stake, and Bally's will become the majority shareholder. Shares of Bally's rose nearly 20% to $11.49, following the announcement. ($1 = 0.8485 euros)
Times
an hour ago
- Times
OBR admits overly optimistic forecasts — raising chance of a downgrade
Rachel Reeves is facing mounting pressure before the autumn budget after the fiscal watchdog said it had been too optimistic about its economic forecasts. The Office for Budget Responsibility said that it had overestimated growth by an average of 0.3 percentage points over two-year periods and 0.7 points over five years. It also said that it had been too pessimistic about its immediate one-year projection by 0.4 percentage points. The forecaster said that it would review how it assessed the potential effects of government policies such as planning reforms, along with the effect of trade. It raises the prospect that the forecaster will downgrade the economic forecasts before the autumn budget, increasing the likelihood that Reeves will have to raise taxes to balance the books. The chancellor has left herself with £9.9 billion of fiscal headroom, effectively spare money, before the budget. The government's succession of policy reversals, on winter fuel payments and welfare, threaten to wipe out more than £6 billion of her headroom. A downgrade in the economic forecasts would effectively push the public finances into the red. Estimates from experts suggest that a 0.2 per cent reduction in output would cost Reeves as much as £12 billion. • How accurate are OBR forecasts? It has been wrong before The OBR said: 'We will take stock of the lessons that we have learnt from our approach to capturing the impact of government policy measures on our forecast for potential output.' The watchdog said that it would also review how it costs supply-side measures such as housing plans and trade. 'We will also review our experience to date in estimating the supply-side effects of policy,' an evaluation report by the OBR said. In March, the OBR said reforms to the planning system would increase GDP by 0.2 per cent by 2030. The report added: 'We intend to refine how we construct … our housing supply forecast, in light of the large increase in housing supply that we expect to occur in response to the government's planning reforms.'
Daily Mail
2 hours ago
- Daily Mail
AstraZeneca boss mulls New York listing in fresh blow for City: Exodus risks transforming London into a 'global backwater'
The boss of Britain's biggest listed firm is considering shifting its stock market listing to the US in a move that raised fears the City could become a global backwater. AstraZeneca chief executive Pascal Soriot is reportedly weighing what would be a devastating blow to the London Stock Exchange. The move comes amid growing frustration with the UK's rules on approving new medicines as well as a row over drug prices between the industry and the NHS. Soriot has spoken privately of his desire to move the FTSE 100 drugs giant's listing on multiple occasions. He has also considered moving AstraZeneca's headquarters away from the UK as well as its main stock market listing, the Times reported, citing sources familiar with the matter. Shares have fallen by 17 per cent over the past year. They rose 2.8 per cent, or 282p, to 10,402p following the report. Soriot, 66, has previously criticised the UK and the rest of Europe for falling behind other countries such as the US and China in developing medicines. In April, he said that innovation in pharmaceuticals 'has mostly been funded by the US'. The company has also been heavily investing in China, which Soriot considers to be a major untapped source of sales. AstraZeneca is the largest company on the London Stock Exchange with a value of £158billion. A move would deal a severe blow to the beleaguered UK market, which has been hit by a number of defections. It is also likely to fuel fears that other major British firms, including oil giant Shell and miners Glencore and Rio Tinto, all of whom have previously considered moving away from London, could follow suit. Michael Healy, UK Managing Director at trading platform IG, said: 'Another week, another potential hammer blow to the UK stock market. We're in dangerous waters – London risks becoming a global backwater unless something changes fast.' Charles Hall, head of research at broker Peel Hunt, said: 'This is another warning shot that we cannot take our capital markets for granted.' But Soriot is likely to face stiff resistance from members of the company's board of directors as well as from the Government. Dan Coatsworth, investment analyst at broker AJ Bell, said such a move would be 'difficult to pull off' for AstraZeneca, which declined to comment.
