By Mimosa Spencer and Tassilo Hummel
PARIS (Reuters) – Recently appointed Deputy Managing Director of Moët Hennessy, Alexandre Arnault, son of Bernard Arnault, took office in the LVMH Wines and Spiring Division on Monday, while the threat of a trade war with the States – hovers. United which could complicate the recovery efforts of the branch in difficulty.
The alcohol division of LVMH, which weighs 5.86 billion euros, markets, among other things, Champagne Moët & Chandon and Cognac Hennessy and saw its turnover fall for two consecutive years and its operating profit dive moreover of a third in 2024.
His performances will only get worse if the customs duties newly imposed by Donald Trump on China aggravates the economic slowdown in this country, and if he implements his threats against Europe.
Alexandre Arnault, 32 years old, aspires like the rest of his siblings more responsibilities in his father’s empire and could see his future evolve according to the performance of Moët Hennessy in the coming years.
He told Reuters to need time to develop a plan.
“Leave us 100 days to really put the head inside and understand the business and how it is articulated (…) because there are a lot to restructure,” he told Reuters on the sidelines of the publication of the group’s annual results last week.
The United States is the largest market in the division in terms of sales, with just over a third of its high-end cognacs and champagnes sold in this country.
Representing less than 10% of sales of the LVMH group, the unit is vulnerable to trade tensions.
Commercial data shows in particular that the Cognac activity of LVMH increased its deliveries in the United States in December, distributors having completed their stocks.
French luxury groups were also affected during the first term of Donald Trump in 2016, when he targeted champagne and handbags in response to a French tax on the digital services which he estimated as prejudicial to American companies .
“While we continue to believe that the American spirits market will recover more, customs duties provide short -term uncertainty,” Barclays analysts wrote in a note on Tuesday.
Close to Trump
The Arnault family, however, has close links with the new tenant of the White House. The director general of LVMH even attended the nomination of Donald Trump on January 7 in Washington DC with his wife Hélène Mercier-Arnault, their daughter Delphine Arnault, Director General of Dior, and Alexandre Arnault.
Welcoming a “wind of optimism” in the United States, Bernard Arnault said last week that LVMH was planning to increase his production capacities in this country.
Alexandre Arnault took office as Deputy Managing Director of Moët Hennessy on Monday, alongside Jean-Jacques Guiony, LVMH financial director for a long time.
Responding to recent speculations on the fact that LVMH could review its links with Diageo, which has a minority participation in the group’s alcohol division, Bernard Arnault said last week that the sale of certain parts of the company in difficulty was “Not on the agenda”.
He also said that he would closely follow the next actions of his son and Jean-Jacques Guiony.
“I’m sure they’re going to put it all back on rail towards growth, let’s leave their two years to show what they can do,” he added.
Alexandre Arnault should in particular rely on his experience acquired during his previous posts at Rimowa and Tiffany & Co, where his mission was to revive aging brands, freshly acquired by LVMH.
At Tiffany & Co, the success of the advertising campaign featuring Beyonce and Jay-Z and the controversial slogan “Not Your Mother’s Tiffany” (not your mother’s tiffany) helped uple the image of the old brand almost 200 years.
Tiffany & Co’s performance at the end of the year also showed some signs of improvement, analysts said.
LVMH also had trouble finding success with its high -end wines and spirits due to inflation in Western economies and the abandonment of traditional wines and spirits by the youngest.
“This is an activity whose growth prospects are less than those of other parts of the company; the difficulties are there to last,” Carole Madjo, analyst at Barclays, told Reuters.
(Tassilo Hummel and Mimosa Spencer report; Etienne Breban; edited by Kate Entringer)
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