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Analysis - LVMH has highest exposure to global emerging spirits markets

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LVMH has the broadest exposure among its Western rivals to the world's emerging markets, in terms of its proportion of sales and profits from spirits, an analyst has said.

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The luxury goods group's Moet Hennessy drinks unit accounts for 57% of its net sales and profits in spirits from these markets, analysts Bernstein Research suggested in a report published today (10 October). Global emerging markets are defined in the report as Latin America, Central & Eastern Europe, emerging Asia and Africa & the Middle East.

Moet's nearest rivals in terms of sales and profits exposure is estimated to be Remy Cointreau, with 48% of its net sales in these markets and 49% of profits. The two French firms are followed by Pernod Ricard, and then Diageo.

However, the report highlights that Diageo remains the world's largest spirits player in terms of net sales, with around US$11bn, followed by Pernod Ricard (US$8bn), then Suntory (US$5.4bn). 

Meanwhile, in terms of global volumes, cheap, local spirits continue to dominate the category, driven by baijiu in China and vodka in Russia. The “informal” spirits segment makes up 67% of global volumes. Within this, 60% comes from local baijiu players in China and around 20% from local vodka players in Russia, Bernstein found.

Emerging Asian markets account for around 54% of global spirit volumes and around 51% of global profits, but only 47% of global net sales, the report said.

Bernstein estimates that the global spirits market was around 3bn 9-litre cases in 2012, $117bn of sales and $25bn of profits, compared to an estimated $35bn of EBIT for beer.


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