LVMH's €5.86 billion spirits division, which markets Moët & Chandon champagne and Hennessy cognac among others, has seen its sales fall for two consecutive years and its operating profit plunge by more than a third in 2024.
Its performance will only worsen if Donald Trump's newly-imposed tariffs on China exacerbate the economic slowdown there, and if he carries out his threats against Europe.
Alexandre Arnault, 32, like the rest of his siblings, aspires to greater responsibility in his father's empire, and could see his future evolve according to Moët Hennessy's performance over the next few years.
He told Reuters he needs time to work out a plan.
"Give us 100 days to really get our heads into it and understand the business and how it's articulated (...) because there's a lot to restructure," he told Reuters on the sidelines of the group's annual results last week.
The United States is the division's biggest market in terms of sales, with just over a third of its high-end cognacs and champagnes sold there.
Representing less than 10% of LVMH Group sales, the unit is vulnerable to trade tensions.
In particular, trade data show that LVMH's cognac business increased its shipments to the US in December, as distributors replenished their inventories.
French luxury groups were also hit during Donald Trump's first term in office in 2016, when he targeted champagne and handbags in response to a French tax on digital services that he saw as detrimental to US businesses.
"While we continue to believe that the US spirits market will recover further, the tariffs bring near-term uncertainty," Barclays analysts wrote in a note on Tuesday.
CLOSE TO TRUMP
The Arnault family, however, maintains close ties with the new tenant of the White House. The LVMH CEO even attended Donald Trump's inauguration on January 7 in Washington D.C., accompanied by his wife Hélène Mercier-Arnault, their daughter Delphine Arnault, CEO of Dior, and Alexandre Arnault.
Hailing a "wind of optimism" in the United States, Bernard Arnault said last week that LVMH was considering increasing its production capacity in the country.
Alexandre Arnault took up his position as deputy CEO of Moët Hennessy on Monday, alongside Jean-Jacques Guiony, LVMH's long-standing CFO.
Responding to recent speculation that LVMH might review its ties with Diageo, which holds a minority stake in the group's alcohol division, Bernard Arnault said last week that selling off parts of the troubled business was "not on the agenda".
He also declared that he would be keeping a close eye on the next steps taken by his son and Jean-Jacques Guiony.
"I'm sure they'll get everything back on track towards growth, let's give them two years to show what they can do," he added.
Alexandre Arnault is expected to draw on the experience he gained in his previous positions at Rimowa and Tiffany & Co, where his mission was to breathe new life into aging brands freshly acquired by LVMH.
At Tiffany & Co, the success of the advertising campaign featuring Beyonce and Jay-Z and the controversial slogan "Not Your Mother's Tiffany" helped shake up the image of the almost 200-year-old brand.
Tiffany & Co's year-end performance also showed some signs of improvement, analysts pointed out.
LVMH also struggled to find success with its high-end wines and spirits, due to inflation in Western economies and a move away from traditional wines and spirits by younger consumers.
"This is a business with less growth prospects than other parts of the business; the difficulties are here to stay," Barclays analyst Carole Madjo told Reuters. (Reported by Tassilo Hummel and Mimosa Spencer ; edited by Kate Entringer)
