The Art of Slowing Down

096: Alexandre Arnault’s Gold-Plated Problem

May 13, 2025

∙ Paid

I was recently speaking with an individual in preparation for the Financial Times’ Luxury Summit in Barcelona, Spain next week and they mentioned that “75% of luxury spending comes from middle- and lower-class consumers”. I did a few calls with industry experts through the expert networks I use for this type of work and the number held consensus with the individual’s I spoke to. What is interesting is that this is in direct contradiction to LVMH, and specifically the Moët Hennessy division where Alexandre Arnault is now the Co-CEO.

Moët Hennessy has traditionally printed cash for LVMH, generating nearly $6 billion in turnover in 2024. Unfortunately, demand in both the United States and China declined for the second straight year and operating profited crashed by approximately 33%. For those unaware, Champagne and Cognac can only be produced in specific regions of France and are subject to US tariffs on imports from the EU. These tariffs are currently fixed at 10% but as of now will increase to 20% in July (they could go as high as 200% although I believe this is unlikely).

At the end of April, Alexandre Arnault announced that Moët Hennessy staff would be cut by 13% and that they are going to shift the business’ focus to the Moët Hennessy Private group which supposedly caters to ultra-wealthy clientele. This shift towards private clients is baffling since Moët Hennessy’s client base is lower and middle-class individuals who are very price sensitive and will simply not purchase Moët, Veuve or Hennessy if prices increase. HSBC Luxury & Sporting Goods Analyst, Anne-Laure Bismuth stated that she believes this spending will decline if the price of bottles gets up to $50 or $60 per bottle. I however believe that this threshold is much lower, and we’ve already started to see material cracks (recent earnings report confirmed this). Here are some examples of current pricing that I’ve found online: