Champagne sales are falling because people are too sad to celebrate, LVMH says
A hallmark of a party or celebration is the popping of a bottle of champagne. The fizzy alcoholic beverage kicks off weddings, graduations, new jobs, and new homes. But luxury conglomerate LVMH, home to brands like Louis Vuitton, Hennessy, and Moët, says people don’t have much to celebrate right now—and its champagne sales have taken a hit.
While LVMH’s wine and champagne sales generated $1.52 billion in revenue in the first half of this year, that was down 12% from the division’s revenue last year, according to the company’s earnings report released Tuesday. In the United States, sales were down, but still above pre-pandemic levels, according to the report.
Jean-Jacques Guiony, LVMH’s chief financial officer, blamed the decline on “a serious demand problem for champagne,” a drink often “associated with celebrations, happiness, etc.” LVMH’s champagne brands include Veuve Clicquot, Dom Pérignon, Mercier, Krug and Moët & Chandon.
“Maybe the current global situation, whether geopolitical or macroeconomic, is not making people happy and opening bottles of champagne,” Guiony said on the company’s earnings call this week. “I really don’t know. The truth is, our volumes are down double digits.” Guiony noted that the entire industry is under “severe pressure, especially in Europe,” as consumers grapple with rising costs of consumer goods.
Are people really so sad that they can’t drink champagne?
Given the geopolitical and economic tensions, it’s not too much of a stretch to link consumer sentiment to a drop in sales, especially of holiday-related beverages.
“Seasonality and key events certainly play a role in the choices consumers make,” Sean Goldsmithco-founder and CEO of non-alcoholic beverage retailer Proof zerotold Luck. “With the election coming up and a lot of uncertainty around that, people may be waiting to pop the champagne.”
Renée Zavislak, a certified therapist in California who works with clients on their alcohol use, also said people are too sad to buy champagne—but for a slightly different reason. The root cause of the decline, she said, may be that people are realizing that drinking alcohol only makes negative emotions related to “political unrest and environmental disasters” worse.
“People are finally realizing that alcohol only exacerbates anxiety and depression,” says Zavislak. Luck“So yes, in a very different sense, people are too sad to buy champagne—but only because they have accepted that champagne will only make them sadder. I have lost count of the number of customers who have stopped drinking or have cut back significantly.”
Whether it is a lifestyle, health or mental health choice, consumers are increasingly moving away from alcohol in favour of non-alcoholic beverages, including non-alcoholic champagne, beer and other spirits. It has become A particularly popular choice among Gen Z consumers. Indeed, more than 60% of those born between 1997 and 2002 said they plan to cut down on alcohol consumption this yearaccording to a January survey by advertising firm NCSolutions.
“Wine sales and all alcoholic beverages are actually down across the board. Last year, wine sales were down 3%, the third consecutive year of decline,” Goldsmith said. “As people become more health-conscious, particularly millennials and Gen Z, people are moving away from wine.” But in the N/A space, sparkling wine sales “remain strong,” meaning N/A consumers still want that familiar bubbly flavor—minus the hangover.
Another factor contributing to the decline in champagne sales is the continued impact of inflation on consumer spending.
“With costs rising everywhere, people have less disposable income to spend on champagne,” said Emma Versaw, head of alcohol at retail technology company Fasttold Luck. “This is the time when consumers are looking for cheaper or more affordable options, so they look for value brands or brands that are having promotions.
“So maybe not less celebration, but less extravagant celebration,” she added. For reference, a bottle of Moët typically costs around $60, but some exclusive bottles cost more than $6,000. A bottle of Veuve Clicquot costs between $60 and $120 on average.
So how long will consumers have to tighten their belts? Guiony said he doesn’t expect that to change anytime soon, adding that retailers stocking LVMH products appear similarly pessimistic.
“In the second half of the year….I wouldn’t bet on a big improvement in the trend,” he said, “although we expect it to be less bad than the first half of the year, it’s probably still negative.”
