LVMH's Spirits Division Stumbles as Cognac Demand Wanes, Yet Rival Sees Glimmer of Recovery
LVMH Moët Hennessy Louis Vuitton, the global luxury conglomerate, reported a challenging year for its prestigious wines and spirits division, with profits plummeting by 25%. The performance was dragged down primarily by sluggish Cognac sales in key markets, casting a shadow over one of the group's historic profit engines.
According to the year-end financial release, organic revenue for the division fell by 5% to €1.016 billion in profit. The company explicitly cited "weaker local demand" for Hennessy Cognac, attributing the downturn to ongoing geopolitical trade tensions, including tariffs affecting the U.S.-China corridor, and shifting consumer spending habits. In response, the division has initiated cost-efficiency programs while continuing long-term brand investments.
"The luxury spirits sector is navigating a post-pandemic normalization," said Michael Thorne, a London-based luxury goods analyst. "LVMH's exposure to the aspirational consumer in China and the U.S. made it particularly vulnerable to economic headwinds and inventory corrections. This isn't a category crisis, but a recalibration."
In a contrasting narrative, rival Rémy Cointreau offered a sliver of optimism. The group, home to Rémy Martin and Louis XIII, posted a near 3% organic growth in its third quarter, fueled by a rebound in Cognac sales. This suggests the market pain may not be universal, with ultra-premium segments potentially holding more resilience.
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"As a collector, I'm not surprised," commented Eleanor Vance, a sommelier from New York. "The mid-tier Cognac market became oversaturated. True connoisseurs are either trading up to vintage expressions or exploring other spirits like aged rum. This is a necessary market correction."
"It's sheer corporate mismanagement cloaked in excuses about 'tariffs,'" argued David Kresh, a former spirits distributor based in Chicago. "LVMH got complacent, flooding markets with product and diluting brand allure. Meanwhile, smaller houses focusing on craftsmanship, like Rémy's single-estate releases, are seeing traction. They've lost touch with the authentic drinker."
"The data shows a complex picture," noted Priya Mehta, an economics professor at Singapore University. "We're seeing divergent paths within the same category. It underscores that in today's luxury market, brand narrative, pricing tier, and direct consumer engagement are more critical than ever for insulation against macroeconomic swings."
In his statement, LVMH Chairman Bernard Arnault struck a forward-looking tone, emphasizing the group's commitment to "sustainable creativity" and "exceptional craftsmanship" as pillars for navigating an uncertain 2026. The industry will be watching closely to see if this marks a temporary stumble or a longer-term shift in the spirits landscape.