LVMH highlights destocking blip in September

LVMH highlights destocking blip in September

Louis Vuitton Moet Hennessy's Champagne sales rebounded faster in the third quarter, but distributors in the US remain edgy.

Champagne sales at LVMH's wine and spirits arm, Moet Hennessy, rose more quickly in the third quarter of 2010, the firm said today (14 October). Like-for-like Champagne and wine sales, excluding gains from currency swings, rose by around a fifth for the three months to the end of September.

"Europe was particularly buoyant, while the US remained solid," the firm told analysts on a conference call.

At the same time, there were signs that sales of the renowned French fizz remained tied to fragile consumer sentiment, particularly in the US.

LVMH said that there was "almost no movement" in Champagne price/mix in the quarter. This will further fuel concern in the industry that, while Champagne volume sales have regained some fizz in 2010, pricing has struggled to recover from heavy discounting in 2009.

There were also signs that distributors in the US remain nervous in the run-up to the key holiday selling season.

LVMH said that distributor stocks of Champagne in the US had returned to "normalised levels", following significant destocking in the midst of recession. However, management referred to a spate of destocking in September, which it said "reflected a lot of caution on both sides, for us and the distributors, to make sure that we don't end the year with excess inventory".

The Moet & Chandon producer said that it "wouldn't qualify this as a slowdown". Still, there are clearly nerves about how consumer demand will hold up, as well as about the prospect of another discounting craze if supply exceeds that demand.

Champagne, like the US economy, is not out of the woods yet.