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.
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 (DGE.L), 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.
