Americans may be known to love a cold beer, but lots of them are also sipping champagne or cognac as they ride out the pandemic.
One company taking advantage of Americans’ refined tastes is French luxury giant LVMH, owner of brands including Moët and Hennessy. “We benefited there from a brilliant cognac market,” Jean Jacques Guiony, LVMH’s chief financial officer, said on a call with investors and analysts today. “We could certainly sell more if we had more bottles.”
Guiony said LVMH has been selling cognac in the US as fast as it can bottle it for some time, and sales of champagne have been strong too. Its champagne inventory in the US started to run low at the end of last year, so as retailers restocked to start 2021, sales rose. Many had also rushed to buy ahead of a price increase LVMH implemented at the end of the recent quarter. (The company didn’t say whether the decision by the US in March to suspend tariffs it had levied on French goods, including cognac and wine, at the start of the year had any effect.) The demand helped LVMH’s global volume sales of cognac and champagne to increase 28% and 22%, respectively, compared to last year.
Why Americans are splurging on high-end liquor
Americans started to drink more during the pandemic as they looked for ways to occupy their time and, in some cases, to self-medicate. Many splurged on premium liquor as a way of treating themselves to small luxuries while they’re stuck at home. The Distilled Spirits Council of the United States, a trade group representing distillers and marketers, said sales of high-end spirits rose in 2020 as shoppers who couldn’t go to events or dine out spent more on themselves and tried to bring a restaurant or bar experience into their homes.
Liquor companies have noted similar patterns. “They’re not able to go out to concerts and sports events and those types of things, and so they’re spending more money on food and beverage,” Kathryn Mikells, CFO of Diageo, which owns numerous brands including Johnny Walker and Ketel One, said on a call with analysts and investors this January. “They’re interested in treating themselves.”
Mikells added that the taste for premium booze actually began before Covid-19 hit the US. The past year just heightened it, and she expects it to stick around for a time. That’s good news for makers of top-shelf liquor, including LVMH.