Cognac future brightens as LVMH CEO toasts Chinese New Year growth
LVMH's CEO praised growth for XO in China
LVMH's CEO has given the first official confirmation of a Chinese New Year rebound for Cognac, revealing at least mid-single digit growth during the critical selling period.
Jean-Jacques Guiony, whose company owns Moët Hennessy, said yesterday that VSOP sales by retailers were up mid-single digits while XO "was better than that". "The Chinese year started a bit late, but nevertheless, altogether, we ended with a pretty good performance," Guiony said.
The Cognac category has been hard hit over the past two years by government anti-extravagance measures that have clamped down on gifting and large-scale banquets among officials. However, since the start of the year, producers have shown signs of a turnaround. In January, Remy Cointreau posted a flat Q3 in China, leading analysts to suggest sales had finally bottomed out and that a rebound is on the way. Moët Hennessy also posted a bounce-back in China sales in February.
Pernod Ricard was more cautious after its first-half results in February, but CEO Alex Ricard said he was looking forward to seeing how the company performed over Chinese New Year.
LVMH is the first major Cognac producer to release a quarterly financial statement since Chinese New Year, which this year fell on 8 February. The first day of the lunar calendar sits at the centre of a week-long holiday for most Chinese people and is the year's biggest selling period for Cognac and other premium spirits.
Guiony, who was speaking after the release of LVMH's first-quarter results, also said US Cognac performance remained strong.
"Cognac in the US is up almost double-digits in volumes in Q1, more or less in line with the trend that we have seen," Guiony said. "We ended the quarter with a very low level of stock with our distributors so we will see how we manage the replenishment of this in the months and quarters to come."
In Q1 results, strong Champagne sales combined with the bounce-back in China to give LVMH's wines & spirits unit, Moët Hennessy, a solid start to the year.
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