In This Article:
It's no secret that post-COVID, the wine and spirits market has faced one of its steepest declines as consumers have returned to their regular routines after being isolated for months, with nothing else to do but drink and watch endless hours of TV show reruns.
Not only did people's reliance on alcohol decline, but the uncertain state of the economy and inflation became yet another factor that forced people to begin cutting back on their alcohol spending, especially brands with a pricier price tag.
💰💸 Don’t miss the move: SIGN UP for TheStreet’s FREE Daily newsletter 💰💸
According to a study by IWSR, the total beverage alcohol (TBA) volumes in the U.S. decreased by 3% in 2023 due to imbalanced inventories, economic pressures, and the increasing popularity of non-alcoholic beverages.
Related: Iconic whiskey brand makes harsh decision amid declining sales
This was the first time in the last 30 years that the industry saw declines in alcoholic beverage consumption, especially in spirits sales, which reported a 2% volume decline.
LVMH reports a concerning ongoing decline in wine and spirits sales
LVMH ( (LVMHF) ) owns some of the most luxurious and renowned wine, Champagne, and spirits brands worldwide, such as Moët & Chandon, Dom Pérignon, and Hennessy, to name a few.
Although the company once used to thrive on its wine and spirits exclusivity, this once lucrative Maison has become an economic burden for the luxury company, posting continuous declining sales since 2023.
Related: Popular luxury brand invests in 'sober market'
According to its full-year report for 2024, LVMH's Wine & Spirits sector reported declining organic revenues by 8% compared to last year, with profit from recurring operations down 36%, making it the least profitable sector.
The company attributed the steep decline to the exchange rate fluctuations and the post-Covid demand normalization that began in 2023, which it claims has led to a slowdown in consumption. The state of China's economic challenges have also greatly affected the market, as it used to be luxury's star regional client.
Despite a slight decrease, LVMH's Champagne brands maintained a market share of over 22% of all Champagne-appellation shipments. However, cognac and other spirits' sales continued to drop from previous years.
Although LVMH's Wine & Spirits Maison has not been profitable for the last few quarters, the company has continued investing in the sector, launching limited-time products, exclusive editions, and developing collaborations to hopefully get this sector back on a positive track.