LVMH wine and spirits fall short of Q1 expectations

By Erin Smith

Published: 14 April, 2014

LVMH's wine and spirits business group posted a decline of 8% in the first quarter compared to the previous year.

The fusion conglomerate did post an overall revenue increase of 6% in the first quarter, however the gains were entirely driven by fashion and retailing.

According to the financial report on Bloomberg, analysts had predicted growth of 3%, but sales of wine and spirits fell 3% on an organic basis.

The Q1 decline is the first for the business since the fourth quarter of 2009.

Overall, LVMH's wine and spirits is another victim suffering from the recent crackdown by the Chinese government on lavish gift-giving.

The crackdown has hit several suppliers to the Chinese market in recent months. Rémy Cointreau SA stock was downgrade last quarter related to the crackdown, as the cognac giant was over invested in the Chinese market. Both Pernod Ricard and Diageo have had disappointing sales performances and blamed their poor performances on China tightening the rules over corporate gift giving.

Some of the drinks giants had hoped that Chinese New Year would boost sales, but again initial numbers are lower than expected. Pernod Ricard reported disappointing Chinese New Year sales at the end of March.

Printer friendly version