Wines and Spirits revenue
Wines and Spirits saw an increase in revenue of 5% based on published figures. Revenue for this business group increased by 7% on a constant consolidation scope and currency basis, with the net impact of exchange rate fluctuations weighing it down by 2 points. This performance was largely driven by an increase in volumes. Demand remained very strong in the United States and Europe, while China saw a clear improvement in 2016.
Profit from recurring operations
Profit from recurring operations for Wines and Spirits was 1,504 million euros, up 10% compared to 2015. Champagne and wines contributed 658 million euros while cognacs and spirits accounted for 846 million euros. This performance was the result of both sales volume growth and a policy of significant price increases. The operating margin as a percentage of revenue for this business group increased by 1.5 points to 31.1%.
The Wines and Spirits business group had a very good year. Champagne made solid gains, with volumes up 3% and prestige cuvées performing especially well. Hennessy achieved excellent results, with volumes increasing by 10%. The robust momentum demonstrated by Glenmorangie and Ardbeg whiskies, together with the continued expansion of Belvedere vodka, the Chandon brand and the wines of the Estates & Wines collection, also contributed to the progress made in 2016.
Driven by its commitment to excellence and innovation and backed by its powerful and agile distribution network, LVMH’s Wines and Spirits business group won market share in all its key countries. Strong growth was recorded in the US market, even though the distribution contract for Grand Marnier products expired in the second half of the year. Momentum improved in China, while revenue rose in Europe despite the less-than-favorable economic climate. Delivering its third consecutive year of record revenue, Moët & Chandon reaffirmed its leading position. Building on the strength of its innovations, including Moët Ice Impérial Rosé, the first rosé champagne designed to be enjoyed over ice, and the launch of its 2008 vintages, the brand saw solid growth particularly in North America.
Dom Pérignon continued to develop internationally and roll out its range of premium products. The brand made further inroads with its value-enhancing strategy, increasing its desirability by showcasing its Second Plenitude series, Dom Pérignon P2. Mercier expanded its product range, focusing in particular on its Blanc de Noirs and Brut Réserve lines. Ruinart achieved growth at historic levels, driven by its iconic cuvées. The brand further consolidated its positions in France and continued to expand rapidly around the globe. Ruinart’s close ties with the contemporary art scene were reaffirmed by its collaboration with the photographer Erwin Olaf. Veuve Clicquot kept up its momentum. The success of its Brut Rosé as well as innovations including Vintage 2008, Rich and Rich Rosé spurred the brand’s growth in its mature markets, while Carte Jaune made considerable headway in the key markets of Japan, the United States and Australia. Moving ahead on a solid growth trajectory, Krug saw its momentum improve considerably in 2016, invigorated by the remarkable success of Krug 2002. An original brand image strategy, combined with innovative digital communications, helped raise its profile. Estates & Wines was buoyed by the upturn in the US market and expanded its portfolio of Icons wines with the launch of Ao Yun in China and a new Single Vineyards range for Newton in California.
Chandon continued its expansion efforts in its main markets, backed by its innovation policy and its partnership with the McLaren-Honda Formula 1 team. Hennessy once again recorded a strong increase in its sales volumes, fueled by the solid results achieved in all its key markets. The brand saw unprecedented growth in the United States, driven by its Hennessy Very Special cognac and thanks to its highly successful communications campaign. This strong momentum was seen across all of North America and the Caribbean. In China and in other Asian markets like South Korea and Singapore, shipping levels continued to recover, while distributor stocking levels remained healthy.
Hennessy forged ahead with its strategy to move its product portfolio upscale, reinventing its fundamentals through iconic limited-edition releases like Hennessy.8, a tribute to the expertise handed down through eight successive generations of Master Blenders since 1800. Glenmorangie and Ardbeg continued their advances in the United States, Europe and the Asia-Pacific region. Glenmorangie reaffirmed its leadership position as an innovator in the single malt category. Both brands received a number of international awards. Belvedere remained on a steady growth track, reinforcing its position in ultra-premium vodka with innovations such as Belvedere Bespoke, offering customers the option to create their own personalized bottles.