Moët Hennessy, the esteemed wines and spirits division of luxury conglomerate LVMH, is confronting a significant financial downturn, transitioning from generating €1 billion in cash in 2019 to burning through €1.5 billion by 2024. This decline has prompted a strategic leadership overhaul and a comprehensive plan to restore the division's profitability.

The crisis at Moët Hennessy underscores the challenges luxury brands face when aggressive expansion and pricing strategies misalign with market realities. Under former CEO Philippe Schaus, the division pursued substantial acquisitions, including the 2019 purchase of a controlling stake in Château d'Esclans and the 2021 acquisition of a 50% stake in Armand de Brignac Champagne. Additionally, the launch of the Clos19 e-commerce platform in 2017 aimed to expand direct-to-consumer sales but was discontinued in September 2024 due to underperformance. These initiatives, coupled with price increases exceeding one-third since 2019, strained relationships with retailers and led to declining sales volumes, culminating in a 36% drop in profits in 2024.

In response to the crisis, LVMH announced a leadership overhaul in November 2024. Jean-Jacques Guiony, LVMH's Chief Financial Officer since 2004, was appointed CEO of Moët Hennessy, effective February 1, 2025. Alexandre Arnault, son of LVMH Chairman Bernard Arnault and former Executive Vice President at Tiffany & Co., was named Deputy CEO of the division. These appointments signal LVMH's commitment to revitalizing Moët Hennessy by leveraging experienced leadership and familial ties to the company's heritage.

The new leadership team has outlined a comprehensive turnaround plan focusing on prioritizing the growth and development of top global brands within the portfolio, implementing measures to reduce operational costs, including a planned reduction of approximately 1,200 jobs primarily through natural attrition and reassignments, and addressing the challenges posed by changing consumer preferences, particularly among younger demographics who are consuming less alcohol, and navigating global economic uncertainties, including trade tensions affecting key markets like the U.S. and China.

Moët Hennessy's crisis reflects broader challenges within the luxury goods sector. The industry is grappling with shifting consumer behaviors, as younger generations exhibit different purchasing patterns and preferences. Additionally, global economic uncertainties, including trade disputes and tariffs, have impacted international sales and profitability. The situation at Moët Hennessy serves as a case study in the complexities of managing luxury brands in a rapidly evolving global market.

The success of the turnaround strategy will be closely monitored, as it holds significant implications for LVMH's overall performance and the future leadership dynamics within the Arnault family. The luxury goods industry will be watching closely to see how Moët Hennessy navigates these turbulent times and whether the new leadership can steer the division back to its former profitability.