In a significant move that has sent shockwaves through the luxury sector, Moët Hennessy, the wines and spirits division of LVMH, has announced plans to reduce its workforce by over 10%, equating to approximately 1,200 positions. This decision was reported by the Financial Times on May 1, 2025, following an internal video message from CEO Jean-Jacques Guiony.
Guiony, alongside Deputy Managing Director Alexandre Arnault, informed employees of the impending cuts during a video address earlier in the week. The rationale behind this drastic measure is to revert staffing levels back to those seen in 2019. Despite LVMH's solid financial performance, Moët Hennessy appears to believe that adjustments are essential to maintain competitiveness in the evolving market landscape.
While LVMH has indicated that Moët Hennessy’s operations have returned to pre-pandemic levels, the company plans to adjust its organizational structure and gradually revert to 2019 staffing levels primarily by managing natural turnover and not filling vacant positions. This strategy reflects a broader trend among luxury brands facing economic pressures and shifting consumer behaviors.
In 2024, Moët Hennessy’s revenue fell by 11%, totaling 5.9 billion euros, largely attributed to a slowdown in consumption, particularly in China. The decline in sales has raised concerns about the potential impacts of the planned workforce reduction on employee morale and productivity. Analysts note that such cuts could also tarnish the brand's reputation in an industry where image is paramount.
"It’s a real thunderclap hitting the luxury world," remarked a market analyst, highlighting the unexpected nature of the announcement given LVMH's otherwise robust financial results. The luxury sector has been grappling with various challenges, including increasing competition and geopolitical tensions that have affected consumer confidence.
In light of the ongoing trade tensions, particularly the reciprocal tariffs of 20% imposed by the Trump administration on European Union products, Moët Hennessy’s management faces additional hurdles. The tariffs could further complicate the company’s efforts to stabilize its market position and profitability.
As part of the restructuring, Guiony and Arnault aim to streamline operations within Moët Hennessy, which encompasses 29 prestigious brands, including Hennessy, Moët & Chandon, Krug, and Veuve Clicquot. This move follows a major restructuring undertaken in November 2024 to address strategic challenges and declining sales.
In a recent quarterly report, LVMH noted that the wines and spirits division continued to experience declining revenues, with a further 8% drop in the first quarter of 2025. The company reported a total revenue of 20.3 billion euros, down 2% from the previous year. The U.S. market, which accounted for 34% of LVMH's wine and spirits sales in 2024, has been pivotal in offsetting losses in other regions, particularly China.
Despite these challenges, LVMH has continued to reward its shareholders generously, distributing nearly 7 billion euros in dividends in 2024. This has led to criticism that the multinational is prioritizing shareholder returns over employee job security. Critics argue that the company could explore alternative solutions to boost revenue, such as reallocating a portion of its substantial shareholder payouts to invest in its brands or address workforce needs.
In a broader context, the luxury industry is at a crossroads. The pandemic has altered consumer habits, and brands are now tasked with navigating a recovery that may not resemble the pre-COVID landscape. The upcoming months will be crucial in determining the long-term effects of Moët Hennessy’s workforce reduction and whether it will succeed in revitalizing its business model.
As the luxury sector braces for the fallout from these developments, the implications of Moët Hennessy’s decisions will resonate beyond its own operations, potentially influencing trends and strategies across the industry. The future of Moët Hennessy and its place within the LVMH portfolio remains uncertain, with many eyes watching closely to see how it adapts to the shifting economic landscape.
