Latest news with #MoëtHennessy
Reuters
12-06-2025
- Business
- Reuters
Breakingviews - LVMH would be better off without M and H
LONDON, June 11 (Reuters Breakingviews) - Bernard Arnault likes empire-building, not the other way around. Yet the LVMH ( opens new tab boss's $270 billion luxury company, whose 75 brands span Louis Vuitton bags, Moët champagne and Hennessy cognac, is now saddled with a conglomerate discount. The struggling drinks unit, which brings few synergies and faces tobacco-like risks, should be jettisoned. Selling or spinning off Moët Hennessy sounds like heresy. That's not just because it accounts for two letters in the French luxury group's name: LVMH was created in 1987 through the merger of Moët Hennessy and Louis Vuitton. Pricey tipples like Dom Pérignon champagne, which sells for about 200 pounds ($270) a bottle – and higher for those made in the best years – have also acted as a hedge, as they are less exposed to economic cycles than some goods like shoes or handbags. Yet that argument is starting to look shaky, as consumers increasingly hunt out cheaper drinks, opens new tab. The unit, accounting for about 7% of group sales, has been the worst-performing among LVMH's six divisions in the past year. Sales fell 8% to 6 billion euros last year, whereas LVMH's total revenue rose 1%. For now, Arnault seems focused on fixing the business, but it's a good time to rethink where it belongs. Unlike Sephora – LVMH's lower-margin beauty retailer – it neither provides valuable intel that can help shape strategy for the rest of the group, nor offers much opportunity for cross-selling. Moreover, the world is changing rapidly, with the next generation of aspiring luxury consumers willing to embrace a future without alcohol. A pariah status akin to tobacco could damage the very brand desirability that LVMH has so painstakingly curated. LVMH's 66% stake in the drinks unit could be worth 12 billion euros, if valued on the same average multiple of 14 times 2026 operating profit fetched by rivals Diageo (DGE.L), opens new tab and Pernod Ricard ( opens new tab. Given its size, and current challenges, a spinoff probably makes more sense than a sale for now. Listing the unit separately would leave behind a simpler, faster-growing luxury group, which should be valued more highly by investors. A simple sum-of-the-parts calculation suggests that LVMH could be worth some 369 billion euros including net debt, a 47% uplift on its current enterprise value. Selling the drinks business would still be a big step for Arnault, not least because his son Alexandre, who is in the closely watched succession contest among five siblings, is currently its deputy CEO. Still, the fact that Big Tobacco stocks like British American Tobacco (BATS.L), opens new tab are now valued at just 9 times operating profit suggests that the drinks unit could have further to fall. LVMH is better off without M and H. Follow Yawen Chen on Bluesky, opens new tab and LinkedIn, opens new tab.
LeMonde
07-06-2025
- Business
- LeMonde
LVMH hit by cognac crisis and champagne slump
The luxury group LVMH has long prided itself on owning some of the world's most prestigious wine and spirits brands. The cognac Hennessy, champagnes Moët & Chandon, Veuve Clicquot, Krug, and Dom Pérignon, as well as, more recently, the rosé from Provence Minuty, are the jewels of its Moët Hennessy division. These brands have cemented its position as the global leader in both cognac and champagne. While this was once a source of pride as bottles flew off the shelves, the division has become a source of tension as the cognac crisis and champagne slowdown have upended forecasts. After an initial slowdown in 2023, Moët Hennessy – 34% owned by British group Diageo, the world's leading spirits company – reported 2024 revenue of €5.9 billion, down 11%. The trend continued into the first quarter of 2025, with another 9% decline in sales to €1.3 billion. At first glance, the wines and spirits division might seem like a small contributor to the group led by Bernard Arnault. It accounts for just about 7% of total sales, far behind the fashion and leather goods powerhouse, and trailing distribution, watches and jewelry, and perfumes and cosmetics. But its share of operating profit is significant. Thanks to their high margins, cognac and champagne fit seamlessly into the world of luxury.
Irish Times
19-05-2025
- Business
- Irish Times
Diageo Plans $500m in cost cuts as US tariffs kick in
Drinks giant Diageo will cut costs by $500 million (€444 million) over three years as the company grapples with US trade tariffs. US president Donald Trump's trade tariffs will cost $150 million annually at current levels, half of which it can mitigate, Diageo said in a statement Monday. The distiller reiterated its guidance for the full year and expects sales growth to improve in the second half. The company's shares rose as much as 2.4 per cent in early trading in London. They had fallen just over 15 per cent so far in 2025 through Friday's close. READ MORE Like rivals, Diageo has been hit by a slowdown in the US, its biggest market, and more recently higher trade friction that threatens to further dent consumer confidence. That led the company to scrap its long-held medium-term sales target in February. Organic net sales rose 5.9 per cent in the third quarter, beating analyst estimates, as wholesalers in North America stocked up ahead of anticipated tariff announcements. Strong performance of Don Julio lifted tequila sales. Given that growth was driven by orders being pulled forward ahead of the tariff announcements, Diageo expects a weaker final quarter – though its second half performance overall will be an improvement on the first. Diageo didn't give details on where it will cut costs. Rival Moët Hennessy said this month it would reduce its workforce due to shrinking demand as well as a tariff stand-off between the European Union and China over Cognac. Citi analyst Simon Hales said Diageo's cost-saving program should be well-received by investors, and with the absence of new negatives, there was 'increasing confidence that Diageo is in control of what it can control.' Diageo said the Asia Pacific region continued to weigh on sales. It also expects a slight decline in organic operating profit in the second half of its fiscal year compared to last year, which includes the impact of the tariffs. 'Tariff uncertainty represents a distraction, however Diageo is in recovery mode,' Jefferies analyst Edward Mundy said in a note. – Bloomberg
Daily Mail
15-05-2025
- Business
- Daily Mail
Report: Popular champagne company in crisis after hiking prices
The world's most famous champagne brand is in crisis after a devastating slump in sales. 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 year, 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. '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.
Daily Mail
15-05-2025
- Business
- Daily Mail
World's most famous champagne company in crisis after hiking prices and slashing jobs
The world's most famous champagne brand is in crisis after a devastating slump in sales. 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.
