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Trump's tariff threats complicate Alexandre Arnault's leadership of LVMH's drinks division.
LVMH's wine and spirits division is grappling with declining revenues and impending U.S. trade tariffs as Alexandre Arnault steps in to lead the unit.
Alexandre Arnault, the 32-year-old son of LVMH CEO Bernard Arnault, is stepping into a key role in managing the luxury conglomerate's underperforming $6 billion wine and spirits division, which features renowned brands such as Moët & Chandon champagne and Hennessy cognac.
This division has experienced two years of consecutive revenue declines and a steep drop in operating profit in 2024. Arnault, who became deputy CEO of the unit in early February 2025, has announced plans to formulate a restructuring strategy in the coming months, emphasizing the necessity for a significant overhaul of the operation.
Arnault's new position comes at a challenging time due to trade tensions, especially with the ongoing threat of tariffs from U.S. President Donald Trump.
The United States represents the largest market for LVMH’s alcohol division, making up over a third of its premium cognac and champagne sales.
With less than 10% of the company's overall sales coming from the wine and spirits segment, the division remains susceptible to fluctuations in global trade regulations.
Trump’s trade tariffs on China and possible new tariffs on Europe have heightened concerns about more negative effects on the business, as uncertainty in trade could hinder growth in critical markets.
In light of these challenges, Arnault has requested a period of 100 days to evaluate and comprehend the business, while also recognizing that restructuring is crucial.
LVMH’s cognac operations in the U.S. experienced increased shipments in December 2024, as distributors prepped their inventories for possible tariff-related disruptions.
LVMH's leadership, including Bernard Arnault, has developed connections with Trump, with the Arnault family attending the U.S. president’s inauguration in 2017. However, previous strains during Trump’s presidency, such as tariffs on French champagne and handbags, have left French luxury groups with lingering apprehensions.
The difficulties facing the wine and spirits division arise as younger consumers increasingly gravitate towards mixed drinks and non-alcoholic alternatives, further complicating growth outlooks.
Alexandre Arnault’s earlier experience in revitalizing brands at Rimowa and Tiffany & Co. is expected to shape his strategy for rejuvenating LVMH's beverage division.
However, analysts caution that the growth potential for the alcohol sector is constrained, with ongoing inflationary pressures in Western markets adding layers of complexity to the turnaround initiatives.
This division has experienced two years of consecutive revenue declines and a steep drop in operating profit in 2024. Arnault, who became deputy CEO of the unit in early February 2025, has announced plans to formulate a restructuring strategy in the coming months, emphasizing the necessity for a significant overhaul of the operation.
Arnault's new position comes at a challenging time due to trade tensions, especially with the ongoing threat of tariffs from U.S. President Donald Trump.
The United States represents the largest market for LVMH’s alcohol division, making up over a third of its premium cognac and champagne sales.
With less than 10% of the company's overall sales coming from the wine and spirits segment, the division remains susceptible to fluctuations in global trade regulations.
Trump’s trade tariffs on China and possible new tariffs on Europe have heightened concerns about more negative effects on the business, as uncertainty in trade could hinder growth in critical markets.
In light of these challenges, Arnault has requested a period of 100 days to evaluate and comprehend the business, while also recognizing that restructuring is crucial.
LVMH’s cognac operations in the U.S. experienced increased shipments in December 2024, as distributors prepped their inventories for possible tariff-related disruptions.
LVMH's leadership, including Bernard Arnault, has developed connections with Trump, with the Arnault family attending the U.S. president’s inauguration in 2017. However, previous strains during Trump’s presidency, such as tariffs on French champagne and handbags, have left French luxury groups with lingering apprehensions.
The difficulties facing the wine and spirits division arise as younger consumers increasingly gravitate towards mixed drinks and non-alcoholic alternatives, further complicating growth outlooks.
Alexandre Arnault’s earlier experience in revitalizing brands at Rimowa and Tiffany & Co. is expected to shape his strategy for rejuvenating LVMH's beverage division.
However, analysts caution that the growth potential for the alcohol sector is constrained, with ongoing inflationary pressures in Western markets adding layers of complexity to the turnaround initiatives.
