Focus on the BIG picture.
Wednesday, Jan 15, 2025
Outside the box.
LVMH Responds to Claims of Champagne Being Shipped to Russia Through Intermediaries
The French luxury powerhouse mentions difficulties in managing product distribution following the suspension of its activities in Russia.
LVMH, the largest luxury goods company globally, has reacted to a report alleging that its champagne reaches Russia via third-party distributors, despite the company halting operations there following the 2022 Ukraine invasion.
LVMH stated that it is "impossible" to completely control where distributors send products.
On Tuesday, French investigative publication La Lettre revealed that LVMH's Moët Hennessy division relied on two U.S. duty-free distributors to send champagne to Russia.
A spokesperson for LVMH responded, emphasizing that the company and its partners "strictly adhere to the laws, regulations, and international sanctions pertaining to marketed products wherever they do business."
LVMH reaffirmed that in March 2022, it stopped operating in Russia, closing its stores, as part of a broader exit by Western companies in reaction to Moscow's full-scale invasion of Ukraine.
The spokesperson also mentioned that certain distributors independently export products, leading to parallel imports—shipments managed by intermediaries, often legal but beyond the original manufacturer's control.
Many Western companies have expressed disapproval of such practices, although they remain widespread.
Russia's wealthy consumers have long been a market for luxury goods, but its share of the global luxury sector is relatively modest compared to primary markets like China and the United States.
LVMH has increasingly concentrated on these significant growth areas.
This report coincides with impending leadership changes in LVMH’s Wines & Spirits division, as chief financial officer Jean-Jacques Guiony and Alexandre Arnault, son of owner Bernard Arnault, are set to lead in February.
The division confronts additional issues, such as trade tensions with China affecting cognac exports and reduced demand in the United States.
These developments underscore the complexities of managing global supply chains for luxury brands amid geopolitical challenges and evolving market conditions.
Despite navigating these obstacles, LVMH's commitment to adhering to international sanctions remains a fundamental part of its operations.
LVMH stated that it is "impossible" to completely control where distributors send products.
On Tuesday, French investigative publication La Lettre revealed that LVMH's Moët Hennessy division relied on two U.S. duty-free distributors to send champagne to Russia.
A spokesperson for LVMH responded, emphasizing that the company and its partners "strictly adhere to the laws, regulations, and international sanctions pertaining to marketed products wherever they do business."
LVMH reaffirmed that in March 2022, it stopped operating in Russia, closing its stores, as part of a broader exit by Western companies in reaction to Moscow's full-scale invasion of Ukraine.
The spokesperson also mentioned that certain distributors independently export products, leading to parallel imports—shipments managed by intermediaries, often legal but beyond the original manufacturer's control.
Many Western companies have expressed disapproval of such practices, although they remain widespread.
Russia's wealthy consumers have long been a market for luxury goods, but its share of the global luxury sector is relatively modest compared to primary markets like China and the United States.
LVMH has increasingly concentrated on these significant growth areas.
This report coincides with impending leadership changes in LVMH’s Wines & Spirits division, as chief financial officer Jean-Jacques Guiony and Alexandre Arnault, son of owner Bernard Arnault, are set to lead in February.
The division confronts additional issues, such as trade tensions with China affecting cognac exports and reduced demand in the United States.
These developments underscore the complexities of managing global supply chains for luxury brands amid geopolitical challenges and evolving market conditions.
Despite navigating these obstacles, LVMH's commitment to adhering to international sanctions remains a fundamental part of its operations.
