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LVMH’s Wine & Spirits division was hit hard in 2009 by destocking and consumer trends such as the increase in off-premise consumption, trading-down and a general lack of demand, but things started to improve toward the end of the year. Revenue from Wines & Spirits declined 12% to €2.74 billion ($3.74b) in 2009, while the division’s profits plummeted 28% to €760 million ($1.03b). Profit through the first half of 2009 fell 41%, but losses during the final six months were stemmed, relatively, to only 20%.
Champagne was the only category in the Wine & Spirits division that failed to post growth during the final quarter. Volumes fell 16% on the year and 4% during the last three months, and LVMH noted that its prestige vintages struggled. Wine volumes did find success toward the end of the year, growing 6% and completing the 12 months with only a 2% dip in volume. Cognac volumes finished the year down 5%, but ended on a high note with an 11% gain in the fourth quarter. That success was due to revitalized demand in China and the category’s “positive momentum” in the United States, where LVMH launched Hennessy Black earlier in the year. The company resisted price decreases during the tumultuous year, and even raised prices in certain markets. LVMH will maintain its pricing strategy in 2010.
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