Global instability reduces demand for luxury goods.

One of LVMH's luxury brands is Hennessy cognac. Photo: Hennessy

Inflation, rising global instability, and declining demand for premium beverages are believed to be the reasons for LVMH's slowdown in growth.

The group, which owns brands including Stella McCartney, Tag Heuer watches, and Bulgari and Tiffany jewelry, reported revenue of €20 billion in the third quarter – up 9% from 17% in the previous quarter.

One of the factors impacting LVMH's business is wine and spirits, including Hennessy cognac, which saw a 14% decline in the third quarter.

The recently released results show that the post-pandemic boom in luxury goods, which helped LVMH become the first company in Europe to reach a valuation of $500 billion earlier this year, is beginning to slow down.

Pauline Brown, former chair of LVMH North America, argues that increasing global uncertainty is a factor contributing to the slowdown in growth.

She said, "If I were still on the board of directors at LVMH or any other luxury company, what would really worry me is the geopolitical instability around the world."

The former leader further commented: “Luxury shopping is a psychological thing to do. Nobody needs a glass of champagne, nobody needs a watch or a diamond necklace… To buy it for yourself or as a gift, you really have to be in the right mood. When we witness atrocities happening… the desire to spend on things that might be considered frivolous diminishes.”

Referring to the decline in the wine and spirits sector, she said: “About half of that business is one brand, Hennessy. There are nearly 30 brands in the wine and spirits sector. The other half is mostly champagne, which actually didn’t grow strongly, about 3% in the quarter. I think cognac has been hit hard in markets like China and North America because consumers there aren’t as willing to spend as high-net-worth individuals.”

LVMH is the first major global luxury company to report earnings this quarter. Hermès and Kering are expected to report theirs on October 24th.

LVMH CEO Bernard Arnault is the world's second richest person. He took the top spot last December, but swapped places with billionaire Elon Musk earlier this year.

Source: https://laodong.vn/kinh-doanh/bat-on-toan-cau-lam-giam-nhu-cau-hang-hieu-1253235.ldo