By
Reuters
Revealed
February 4, 2025
Alexandre Arnault is taking a key position at LVMH’s $6 billion wine and spirits enterprise simply as U.S. President Donald Trump dangers unleashing a commerce warfare, complicating a turnaround effort that might determine the 32-year-old’s future in his father’s empire.
Reuters
The alcohol division, whose manufacturers embody Moët & Chandon champagne and Hennessy cognac, has seen its revenues fall for 2 straight years and its working revenue plunge by over a 3rd in 2024.
Its challenges are solely more likely to get harder if Trump’s newly-imposed tariffs on China add to an financial slowdown there, and if he follows by way of on threatened levies on Europe.
Alexandre Arnault, certainly one of LVMH CEO Bernard Arnault’s 5 kids vying for extra accountability of their father’s empire, informed Reuters he wanted a number of months to attract up a plan.
“Give us 100 days to wrap our heads around it and understand the business … because it’s a business that will need a lot of restructuring,” he mentioned on the sidelines of the group’s annual outcomes final week.
The US is the wine and spirit unit’s largest market by gross sales, with simply over a 3rd of its high-end cognac and champagne offered there. Accounting for lower than 10% of LVMH group gross sales, the unit is weak to commerce tensions.
Commerce knowledge reveals LVMH’s cognac enterprise elevated deliveries to the U.S. in December as distributors constructed up inventories.France’s luxurious teams had been hit in Trump’s first presidential time period when he focused champagne and purses over a French digital providers tax he determined would hurt U.S. companies.
“Whilst we continue to believe that the U.S. spirits market will recover further, tariffs bring short-term uncertainty,” Barclays wrote in a observe on Tuesday.
Bernard Arnault and members of his household have cultivated private ties with Trump. Bernard, his spouse Helene Mercier, Alexandre, and daughter Delphine, who runs Dior, sat proper behind America’s former presidents at Trump’s inauguration. Praising a “wind of optimism” in the USA, Bernard Arnault mentioned final week that LVMH was elevating manufacturing capability there.
Alexandre took over as deputy CEO of the alcohol unit on Monday, alongside long-time LVMH finance chief Jean-Jacques Guiony, an business veteran. Alexandre marked the change on his Instagram account with a publish exhibiting he was heading to certainly one of LVMH’s grand cru estates in Burgundy.
Shedding components of the struggling enterprise was “not on the agenda”, Bernard Arnault mentioned final week in response to current hypothesis LVMH might revisit its ties to Diageo, which holds a minority stake within the drinks division. He mentioned he would maintain a detailed eye on the following strikes from his son and Guiony.
“I’m sure they’ll get everything back on the growth track. Let’s give them two years to show what they can do,” Bernard Arnault, 75, mentioned.
Alexandre is predicted to attract on his expertise from earlier govt roles at German suitcase maker Rimowa and U.S. jeweller Tiffany & Co, the place his missions had been to revive considerably ageing manufacturers, freshly acquired by LVMH.
At Tiffany, he grabbed headlines with a buzzy advert marketing campaign that includes Beyonce and Jay-Z whereas shaking up the practically 200-year-old model’s picture with a controversial new slogan: “Not Your Mother’s Tiffany”. The model’s end-of-year efficiency confirmed some indicators of enchancment, analysts mentioned.
LVMH has struggled to seek out progress in its high-end wine and spirits after a number of years of excessive inflation in Western economies and as youthful drinkers shift to combined and non-alcoholic drinks.
“It’s a business with less growth expectations than other parts of the company, the difficulties are here to stay”, Barclays analyst Carole Madjo informed Reuters.
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