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Slowdown in China affects growth in LVMH wines and spirits divison

Published:  15 April, 2015

Luxury brand LVMH has reported growth in its wines and spirits portfolio in the first quarter of 2015 - but destocking in China continues to affect its drinks portfolio

Overall the LVMH Group reported an overall good performance, despite challange conditions and confirmed a continued focus on innovation. It benefitted from a positive effect of currency fluctations, but growth was driven primarily by its fashion brands and exceptional performance of Sephora and Bvlgari. 

?The drinks division, which owns champagne brands Moet Hennessy, Veuve Cliquot and Ruinart cognac brand Hennessy and malt whiskys Ardbeg, Glenmorangie, rose 1% on an organic basis compared to the same period last year. Turnover was €992 compared to €888m in the same period last year, with value growth on a reported basis of 12%, on the back of the positive 13% effect of strong currency. 

Champagne and wine saw volume up 5%, the company said, with prestige cuvees outperforming the rest of the portfolio. It also reported good growth of Estate & Wines, and strong performance of in the USA and Japan. Champagne sales at Moet Hennessy last year grew to 59.6m bottles, up from 57.4m in 2013, its annual results, released in February said. 

Spirits provided a more mixed pictures, with Hennessy cognac volumes up 2% and "sustained growth" of Belvedere vodka and Glenmorangie. The sector was affected by the continued slowdown of Chinese markets, where Chinese distributors continued destocking. However the sector said the "solid" progress in the USA had helped offest the impact  of continued destocking of cognac in China.  

Today it was confirmed that Chinese GPD fell by the lowest rate since 2009, to 7%, down from 7.3% in the last quarter of 2014. Last month Premier Li Kegiang confirmed its expectations for the year were lower than previous years, at 7%. This follows news last week that China has reported a 15% fall in exports and a 12% fall in imports for the month of March 2015, fuelling concerns that the Chinese economy is slowing down.