Demand for LVMH’s champagne brands is declining this year after the boom that followed Covid-19 lockdowns, a top executive at the luxury conglomerate said.
There was a “general sense of revenge fun” in 2021 and 2022 after consumers were stuck at home, Moët Hennessy CEO Philippe Schaus said in an interview. The drinks and wine division he oversees generated about 7.5% of first-half revenue at parent company LVMH Moët Hennessy Louis Vuitton SE.
“2023 is a little more complicated because this effect of Covid is fading and there is a lot of inflation in all countries,” Schaus said. “So we see ourselves getting back to normal.”
Schaus pointed to a decline in champagne consumption at home. But other markets are holding up well.
“We have seen this summer that demand for luxury champagne has not diminished” at beach and nightclubs on the Greek island of Mykonos and the Italian Riviera, as well as at top restaurants in Paris, Schaus said. The division’s brands include Dom Pérignon, whose bottle of Plénitude 2 vintage 2004 costs €495 in France.
The drinks division’s organic sales fell by 3% in the first half of the year, due to a slowdown in cognac consumption in the US.
LVMH’s wines and spirits division has been acquisitive in the recent past, including an investment in expensive champagne label Armand de Brignac, which is co-owned with rapper Jay-Z. Earlier this year, LVMH bought a majority stake in rosé winemaker Château Minuty.
Schaus said LVMH has no plans to buy more alcohol brands and described its portfolio as strong. But the executive expects more consolidation in the Champagne region.
“There are about 300 champagnes houses So I can imagine that there will definitely be mergers, because 300 is a lot,” he said. “It’s super fragmented.”
The Luxembourg-born director spoke at Château de Saran, surrounded by Moët & Chandon vineyards near the town of Epernay in northern France. The interview took place during the harvest season known as harvest.
Schaus said the volumes are plentiful. Rising temperatures have made yields more erratic, but the industry has been resourceful and adapted to climate change over the past centuries, Schaus said. “Champagne will continue to evolve. But I promise you that in a hundred years people will still be playing Dom Pérignon and Moët & Chandon.”
LVMH is the largest producer of champagne, as it also owns the Krug, Ruinart, Veuve Clicquot and Mercier labels.
Comité Champagne, the industry trade group, said in July that it expects its producers to ship 314 million bottles this year, down 3.7% from last year.