LVMH spirits sales hit by China slump

French luxury goods company LVMH struggled to claw back sales reporting an overall spirits and wine sales decline for 2014 as a result of destocking in China.

China continues to bite as LVMH reports a 3% decline in wine and spirits sales in 2014

The firm’s wine and spirits division declined by 3% last year, with profit from recurring operations reaching €1,147 million.

This decline was attributed to continued destocking of its high-end Cognac in China, as a result of the Chinese government’s clampdown on extravagant spending and gifting amid claims of corruption.

However, LVMH said Hennessy has leveraged its portfolio and global presence, particularly in the US, where “its growth remains strong”.

Other spirits, such as Glenmorangie and Belvedere “continue their development”, the group added.

“In an uncertain economic environment, we can rely on the desirability of our brands and the agility of our teams to further strengthen our leadership in the world of high quality products,” said Bernard Arnault, chairman and CEO of LVMH.

Last month, Diageo reported that while sales have recovered slightly, the slowdown in China, Russia and North America failed to return the group to growth.

In the six months to September last year, French spirits and liqueurs producer Rémy Cointreau reported a sales decline of 15.5%, also blaming the Asia-Pacific market.

Pernod Ricard recorded a different story though, reporting a return to growth for the first quarter of its financial year.