The third son of Bernard Arnault, chairman of Louis Vuitton Moët Hennessy (LVMH), Alexandre is said to be under evaluation for his management abilities. The institutional sector he leads has been hit hard by reduced consumption due to the economic downturn in China and the tariff policies of the Trump administration.
On 12th (local time), Reuters reported, “Alexandre has been tasked with the significant mission of reviving Moët Hennessy, known as LVMH's worst-performing business,” adding, “if he successfully carries out this task in the midst of a tariff war, he could gain an advantage in the competition among the five siblings for succession to lead the $280 billion (approximately 396 trillion won) luxury conglomerate led by his father.”
Currently, Chairman Arnault's five children each lead about 70 brands. The eldest, Delphine, is the CEO of Dior; the second, Antoine, is responsible for communications at the LVMH group; the fourth, Frédéric, is the CEO of Loro Piana; and the youngest, Jean, oversees marketing for Louis Vuitton's watch division. Arnault has previously said, “Let them have two years to show what they can do.” Although Arnault is currently at the helm of LVMH, he may pass on his position to one of his children who proves their management capabilities in the future.
Moët Hennessy, led by Alexandre, is a wine and spirits corporation under the LVMH group, which has served as the group's “cash cow” since its merger with Louis Vuitton in 1978. According to Reuters, the revenue generated by Moët Hennessy has been used by Chairman Arnault to acquire several brands, including the Swiss watch brand Hublot and the luxury jewelry brand Bulgari, as well as to open new stores. Matthieu Dever, the representative of the CGT union at Hennessy, stated, “This institutional sector has played a structurally important role in the group and has enabled its growth.”
However, Moët Hennessy has been struggling with poor performance due to decreased demand in its major markets, the United States and China, since the year before last. Last year, Moët Hennessy's sales were €5.8 billion (approximately 9 trillion won), which has shown a decline for two consecutive years after peaking at €7 billion (approximately 11 trillion won) in 2022. Reports indicate that the company had to lay off 10% of its employees as poor performance continued, with first-quarter sales this year also down 8% compared to the same period last year. In 2015, Moët Hennessy accounted for 20% of LVMH's operating profit, but that shrank to 6% last year.
The problem is that the business outlook may worsen further. Moët Hennessy's main products, champagne and cognac, are produced only in France, and the tariff on EU products, currently fixed at 10%, is set to increase to 20% starting in July. Notably, President Trump has stated that if the EU imposes tariffs on U.S. bourbon whiskey as a retaliatory measure, he would raise tariffs on EU products by up to 200%.
Alexandre is showing efforts to overcome poor performance by expanding the private business aimed at top-tier clients, following the layoffs. Arnault noted, “I decided to create the private division as a separate independent entity for direct reporting.” This division, comprising approximately 80 employees, provides customized wines for the ultra-wealthy and gained attention in 2022 by selling a barrel of Ardmore scotch whiskey to an investor in Asia for £16 million (approximately 299 million won).
Evaluations of Alexandre's strategy are mixed. Reuters commented, “Focusing on top-tier clients could help alleviate the contraction in the luxury industry, which is experiencing its slowest growth in a decade due to tariff threats and declining consumer demand.” Conversely, HSBC analyst Anne-Laure Bismuth said, “Middle-class consumers, who make up a larger share of Moët Hennessy's clientele, may hesitate to buy if the price exceeds $50 to $60 per bottle.”