NEWS
LVMH’S WINE & SPIRITS PROFIT SLUMPED 26% IN H1 DRAGGED BY POOR COGNAC SALES IN CHINA
By Susan Lewis
30-7-2024
Source: LVMH
The wine and spirits unit of Moët Hennessy Louis Vuitton (LVMH) has seen a 26 percent slump in net profit to €777 million (USD715m) in the first half of this year, mainly dragged by poor Cognac sales in China and sluggish Champagne demand worldwide.
The unit’s revenues drop 9 percent on the same period of 2023 to €2.8b, while the whole group’s total revenues declined by only one percent to €41.6b, group net profits dipped 14 percent to €7.2b.
LVMH’s CFO Jean-Jacques Guiony said weak demands in China for the company’s Cognac products is a major reason for the poor performance.
“As far as China is concerned, we have lowered the inventories very much in Q2, so our sell-out numbers are better or not as bad as our sell-in numbers. But when I say not as bad, is that really the sellout numbers are not very, very good.”
Guinoy also expressed concern about the sluggish demands in the Champagne segment. “I think we have a severe demand issue in Champagne as well,” he said.
“Champagne is quite linked with celebration, happiness…maybe the current global situation, be it geopolitical or macroeconomic, does not lead people to cheer up and to open bottles of Champagne, I don’t really know. The fact of the matter is that our volumes are down double digit.”
Looking ahead, Guinoy is not optimistic about Champagne volumes in the second half of the year.
“We have orders from our retailers, they don’t seem to cheer up [much either] for the second half of the year, so I wouldn’t bet on a big improvement in trends. Although we expect it to be less bad than the first half of the year, but probably still negative,” he said.
However, Guinoy said the company will not reduce prices to drive sales.
“We don’t intend to lower prices, but we can do some promotions, particularly promotions linked with volumes, and there is nothing wrong with that. For the time being, the impact is not tremendous, that’s the way we will manage going forward,” he said.
(the writer can be contacted at: info@thewinechronicle.com)
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