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Luxury goods group LVMH has announced its results for the first quarter of 2023. While the fashion, jewellery and cosmetics divisions grew by 17 per cent to 21 billion euros, the beverages division Moët Hennessy only increased by 3 per cent to 1.69 billion euros. Sales of champagne and wines rose from 706 to 796 million euros (+14 per cent), while cognac and spirits fell from 932 to 899 million euros (-5 per cent).
In its annual report, LVMH says: "Champagne again recorded strong sales growth, thanks to the continuation of its value creation strategy." According to the report, rosé wines from the recently acquired Château d'Esclans and Domaine Minuty, as well as Joseph Phelps Vineyards, which was included in the balance sheet for the first time, also performed well.
The basis of the upswing of the overall group in the first quarter is the growth in Asia, especially in China, where the Covid restrictions were lifted. Total sales in the US also grew by 8 per cent, but according to LVMH CFO Jean-Jacques Guiony, most of the increases were due to the less exclusive Sephora retail chain - not to demand for wine and spirits. Continuing, Guiony said, "Business is slowing down a bit. Maybe the interest rate hikes are taking their toll on spending." Apparently, the price increases described as a value-added and premiumisation strategy are no longer easily enforceable in the USA. Figures from Citibank based on credit card data also show that spending on luxury goods in March fell to its lowest monthly level in almost three years, by 18 per cent. According to industry magazine drinksbusiness.com, this could become a problem for all premium beverage manufacturers, as the USA is their largest and most profitable single market.
(al / source: drinksbusiness, winenews)