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Alexandre Arnault becomes deputy CEO at LVMH drinks unit

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Son of LVMH boss says struggling business needs

restructuring

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Trump tariff threats complicate recovery efforts

By Mimosa Spencer and Tassilo Hummel

PARIS, Feb 4 (Reuters) - Alexandre Arnault is taking a

key role at LVMH's $6 billion wine and spirits business just as

U.S. President Donald Trump risks unleashing a trade war,

complicating a turnaround effort that could decide the

32-year-old's future in his father's empire.

The alcohol division, whose brands include Moët & Chandon

champagne and Hennessy cognac, has seen its revenues fall for

two straight years and its operating profit plunge by over a

third in 2024.

Its challenges are only likely to get tougher if Trump's

newly-imposed tariffs on China add to an economic slowdown

there, and if he follows through on threatened levies on Europe.

Alexandre Arnault, one of LVMH CEO Bernard Arnault's five

children vying for more responsibility in their father's empire,

told Reuters he needed a few months to draw up a plan.

"Give us 100 days to wrap our heads around it and understand

the business ... because it's a business that will need a lot of

restructuring," he said on the sidelines of the group's annual

results last week.

The United States is the wine and spirit unit's largest

market by sales, with just over a third of its high-end cognac

and champagne sold there. Accounting for less than 10% of LVMH

group sales, the unit is vulnerable to trade tensions.

Trade data shows LVMH's cognac business increased deliveries

to the U.S. in December as distributors built up inventories.

France's luxury groups were hit in Trump's first

presidential term when he targeted champagne and handbags over a

French digital services tax he decided would harm U.S. firms.

"Whilst we continue to believe that the U.S. spirits market

will recover further, tariffs bring short-term uncertainty,"

Barclays wrote in a note on Tuesday.

TRUMP TIES

Bernard Arnault and members of his family have cultivated

personal ties with Trump. Bernard, his wife Helene Mercier,

Alexandre, and daughter Delphine, who runs Dior, sat right

behind America's former presidents at Trump's inauguration.

Praising a "wind of optimism" in the United States, Bernard

Arnault said last week that LVMH was looking at raising

production capacity there.

Alexandre took over as deputy CEO of the alcohol unit on

Monday, alongside long-time LVMH finance chief Jean-Jacques

Guiony, an industry veteran. Alexandre marked the change on his

Instagram account with a post showing he was heading to one of

LVMH's grand cru estates in Burgundy.

Shedding parts of the struggling business was "not on the

agenda", Bernard Arnault said last week in response to recent

speculation LVMH could revisit its ties to Diageo ( DEO ), which

holds a minority stake in the drinks division. He said he would

keep a close eye on the next moves from his son and Guiony.

"I'm sure they'll get everything back on the growth track.

Let's give them two years to show what they can do," Bernard

Arnault, 75, said.

Alexandre is expected to draw on his experience from

previous executive roles at German suitcase maker Rimowa and

U.S. jeweller Tiffany & Co, where his missions were to revive

somewhat ageing brands, freshly acquired by LVMH.

At Tiffany, he grabbed headlines with a buzzy ad campaign

featuring Beyonce and Jay-Z while shaking up the nearly

200-year-old brand's image with a controversial new slogan: "Not

Your Mother's Tiffany". The brand's end-of-year performance

showed some signs of improvement, analysts said.

LVMH has struggled to find growth in its high-end wine and

spirits after several years of high inflation in Western

economies and as younger drinkers shift to mixed and

non-alcoholic drinks.

"It's a business with less growth expectations than other

parts of the company, the difficulties are here to stay",

Barclays analyst Carole Madjo told Reuters.