LVMH is having Champagne problems. Chief financial officer Jean-Jacques Guiony thinks it could come from fewer celebrations for people to pop the bottle.
The company sold 15% fewer Champagne bottles in the first half of the year, compared to the same period last year, per LVMH’s Tuesday earnings report. Meanwhile, still and sparkling wine sales were up 16%.
The luxury giant reported on Tuesday that it generated 1.4 billion euros, or about $1.5 billion, in revenue for Champagne and wines during the first half of 2024, a 12% decline from last year. The company does not break out specific revenue for Champagne.
Guiony said on Tuesday’s earnings call that the broader Champagne industry has seen weak demand, particularly in Europe.
“Champagne is quite linked with celebration, happiness, et cetera,” he said. “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 world’s largest Champagne maker, LVMH’s brands include Dom Pérignon, Krug, Ruinart, Veuve Clicquot, and Mercier.
Wine and spirits’ 3.2 billion euros in revenue accounted for about 7% of LVMH’s overall revenue in the first half of the year.
Demand started softening last year
This year’s drop in Champagne sales continued the post-pandemic sales softness that LVMH reported last year, when sales dipped slightly from 2022. The French — who drink the most Champagne — consumed less of it, but LVMH saw high-end demand at European beaches and Parisian restaurants, Moët Hennessy CEO Philippe Schaus told Bloomberg in September.
In 2021, Champagne sales globally spiked 14% from pre-COVID records, hitting a peak of $5.7 billion following a wave of post-pandemic celebrations, per industry group Union des Maisons de Champagne.
During the first half of this year, Champagne shipments decreased by 15.2% compared to 2023, a decline attributed to economic uncertainty and inflation affecting consumer spending, said David Chatillon, chairman of the Champagne Houses lobby, in a statement earlier this week.
Disruptions to the Russian and Ukrainian Champagne trade resulted in the loss of billions of dollars of Champagne sales, Pau Roca, director general of the International Organization of Vine and Wine, told Reuters in 2022.
Poor weather conditions in Europe have also resulted in the loss of grapes — Champagne’s essential ingredient — Reuters reported last week.
Wines might fare slightly better in the coming months due to “the existence of economic cycles courtesy of Central Bank’s accommodative policies,” said Guiony on Tuesday. This comes as consumer confidence in Europe rose for a sixth consecutive month, as consumers anticipate a rate cut in September.
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