Revenue from the spirits and cognac segment of LVMH fell 10% in 2023 as demand for Hennessy continued to wane in the U.S. and China, according to the company’s full year revenue earnings report released today.
Overall, revenues from LVMH’s wine and spirits division fell by 4% on an organic basis in 2023 to $7.1 billion (€6.6 billion). Profit was down -2%. The cognac and spirits segment dropped to roughly $3.4 billion (€3.1 billion), down from around $3.9 billion (€3.6 billion) in 2022.
Like other Cognac brands, Hennessy has experienced a significant slowdown in sales in the U.S. after accelerated growth during the pandemic. Revenue gradually recovered for wine and spirits towards the end of the year, rising 4% in Q4.
LVMH’s wine and spirits arm, Moët Hennessy, was the only segment of the world’s largest luxury company to not record positive revenue growth.
Revenue for Glenmorangie and Ardbeg whiskies was affected by market conditions in the U.S. and China, but substantially exceeded pre-Covid levels, thanks to strong performance in travel retail and in Japan. Washington-based Woodinville whiskey expanded its in the U.S., and is now available in 35 states.
Keeping with a premiumization strategy, Belvedere vodka, which went organic last year, also launched high-end Belvedere 10 designed for the nightlife market. Volcánde mi Tierra and Cuban rum-maker Eminente partnered on luxury-positioned events, with the tequila joining Formula 1 in Las Vegas and rum opening a “Casa Eminente” pop-up location in Paris.
The luxury giant overall saw total sales increase by 13% organically compared to 2022.
Cognac, which makes up 4% of spirits dollar share off-premise, was down -10.4% at the end of the year, according to NIQ, mirroring a slower year for the spirits industry overall. Consumers at bars and restaurants across the U.S. are also spending less on Cognac, according to on-premise ordering data from Union released this week. Dollar sales are down from 1.31% to 1.29% share of spirits in the 12 months ending December 31, 2023.
But Hennessy is leading the pack in terms of sales at Union venues, and taking share from all other Cognac brands. Much of its growth is coming from ultra-premium SKUs, which have dropped significantly in price. Hennessy XO drinks dropped nearly $3.00 in price over 2023, and showed 22% growth for that item, according to the report.