LVMH Moët Hennessy Louis Vuitton, the French luxury goods firm at the centre of takeover speculation this week, has reported Champagne and Cognac sales down by more than a fifth in the first quarter of 2009.

Sales from LVMH's wine and spirits arm fell by 22% to EUR540m (US$705.5m) for the first three months of this year, compared to the same period last year, the firm said late yesterday (22 April). Total group sales fell by 7% to EUR4bn for the quarter.

LVMH, which owns the world's best-selling Cognac, Hennessy, as well as Moët & Chandon and Dom Pérignon Champagne and Glenmorangie Scotch whisky, blamed the fall on weaker global demand for Champagne and Cognac in the economic downturn.

"In Champagne, demand was weak in its traditional markets following the effect of destocking at the beginning of the year. This reflects the fact that retailers, given the current economic environment, are reducing their stock levels," said LVMH.

It added: "Sustained by the development of the Asian markets, the Cognac business showed a better resilience despite the unfavourable timing of Chinese New Year. It is worthy to note the relatively limited weight of the first quarter revenue on the full year."

Earlier yesterday, LVMH denied that it is considering selling its wine and spirits division to Diageo, following newspaper reports. It rejected speculation that the two firms have entered talks.

Diageo already owns 34% of Moët Hennessy and has yet to acquire a top Cognac or Champagne brand.

Diageo CEO Paul Walsh said at the company's first-half results conference earlier this year that the group has money for acquisitions. He told just-drinks that acqusitions in 2009 would "depend on the opportunities that arise".