The engine driving cognac sales has yet to regain full speed. LVMH acknowledged it in its half-year results, published Thursday, July 24. Moët Hennessy, its wine and spirits division – of which British company Diageo owns 34% – reported an 8% drop in revenue to €2.58 billion. This marks a further slide after an 11% decline over 2024, to €5.9 billion. The blow was even harsher for recurring operating profit, which fell by one-third to €524 million in the first six months of 2025.
The group, led by Bernard Arnault, explained the disappointing performance due to “weak demand for cognac” and “the impact on customers of trade tensions weighing on key markets in the US and China.” The US and China accounted for 80% of sales of the prized Charente region spirit, whose leading brand is Hennessy.
Across the Atlantic, LVMH – and major competitors such as Pernod Ricard, owner of Martell, or Rémy Cointreau, known for its Rémy Martin brand – were caught off guard. After the post-Covid-19 boom, the wave of inflation disrupted consumer behavior. They suddenly became more cautious about spending just as spirits groups continued to raise their prices. The drop-off was abrupt. Chinese customers also adopted a wait-and-see attitude, troubled by their country’s economic slowdown.
After trade battles
On top of this new consumer mindset, fierce trade battles compounded the problem. Since early 2024, cognac has been ensnared in a conflict between Europe and China. The sector breathed a sigh of relief in early July. Although Beijing decided to impose 32% tariffs on European wine-based spirits, most companies that agreed to set a minimum price – in effect, a price increase ranging from 12% to 16% – were granted exemptions.
LVMH benefited from this agreement. Likewise, Rémy Cointreau revised down the impact of Chinese tariffs on Friday, July 25, from €40 million to €10 million. Conversely, the impact in the US would rise from €25 million to €35 million.
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