LVMH edges toward recovery as luxury demand picks up in China

The world’s biggest luxury group has reported encouraging signs of a rebound, with improving trends in Asia helping to lift overall sales. Even as Cognac continues to lag, momentum in other categories is strengthening.

Is there a glimmer of progress for the luxury goods sector? The latest sales figures from LVMH, the world’s biggest player in the sector, suggest that there might be, but its drinks division remains the weakest performer.

In the third quarter of its financial year, LVMH’s sales rose by 1%, albeit from a poor comparative base, driven by improved demand in China, which had been one of the weakest markets for two years.

LVMH said that trends in Asia excluding Japan, a market dominated by China, had shown “noticeable” improvement in the past nine months.

“Mainland China turned positive in Q3,” LVMH Chief Financial Officer Cecile Cabanis told analysts. That sent the shares up by more than 7%, taking them 13% higher than just three months ago.

The group’s quarterly sales rose 1% to €18.28 billion, a 1% rise against the same period in 2024. However, at the organic level, sales in the first nine months of the year show a 2% fall.

Cabanis said LVMH faces headwinds in the fourth quarter but that the group was confident with the new creative direction its brands are taking.

Drinks division remains under pressure

At the Moet Hennessy Champagne and Cognac arm, however, while there was slight organic growth in the quarter, net sales are 4% lower for the year so far.

While Champagne and Provencal wines picked up, Cognac remains the big headache, “due in particular to the impact of trade tensions weighing on demand in the key markets of the United States and China.”

Although the big Cognac exporters, including Moet Hennessy, have struck a deal with Beijing to charge minimum prices in China, ending the threat of higher tariffs, demand remains poor.

Meanwhile, the US market remains severely hit by the ongoing trade war with Europe, plus the switch away from Cognac among consumers.

Cognac industry seeks support amid trade tensions

Cognac shipments have dropped by 10% over the past year, and the Bureau National Interprofessionnel du Cognac (BNIC) is mooting a temporary reduction in the vineyard area by between 7,000 and 10,000 hectares out of the region’s total 90,000 hectares.

It is also proposing the permanent uprooting of 3,500 hectares and looking to Paris and Brussels for financial help.

Florent Morillon, president of the BNIC, said the industry considers itself a victim of the ongoing trade dispute between China and the EU. “We have suffered the consequences of these decisions. We would like some help because we are collateral damage,” he told Agence France-Presse.

The minimum acceptable amount would be €10,000 per hectare, he said, but ideally it should be between €10,000 and €15,000 per hectare. At 3,500 hectares grubbed up, the total package would be between €35m and €50m.

That, he said, would be about the value of half a month’s sales in China before the trade battle began.

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