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Jay-Z sells 50% stake in his champagne house to LVMH

Saleha Riaz
·3-min read

Watch: Moet Hennessy buys in to Jay-Z's champagne brand

Jay-Z announced he has sold half of his high-end champagne company Armand de Brignac to luxury giant LVMH’s (MC.PA) wine and spirits division, Moët Hennessy, for an undisclosed price.

The rapper said Moët Hennessy, maker of Veuve Clicquot, Krug and Moët & Chandon champagnes, was a “natural partner” that would take Armand de Brignac to “the next level of taste and distribution.”

“We want the brand to outlast all of us… We don’t cut corners or lean on fame to sell the product. We’ve built it through passion and integrity,” he added on a Zoom call.

Jay-Z bought a 50% stake in Armand de Brignac in 2006 with a 50% stake in the brand. He then bought the remaining half in 2014.

“We want the brand to outlast all of us… We don’t cut corners or lean on fame to sell the product. We’ve built it through passion and integrity,” said Jay-Z. Photo: REUTERS/Mike Blake
“We want the brand to outlast all of us… We don’t cut corners or lean on fame to sell the product. We’ve built it through passion and integrity,” said Jay-Z. Photo: REUTERS/Mike Blake

Philippe Schaus, chief executive of Moët Hennessy, said “in the coming years, we can increase the volumes given Moët Hennessy’s 1,600 hectares of vineyards to supply grapes in the Champagne region.”

The deal is aimed at growing Armand de Brignac through LVMH's global distribution networks and using its vast resources.

Schaus said Jay-Z’s involvement has “disrupted” the champagne category “and opened it up to a new market.”

READ MORE: Asia's hunger for luxury watches, leather goods boosted LVMH results amid pandemic

Armand de Brignac, known by the nickname Ace of Spades, sold more than half a million bottles in 2019 but champagne sales have been hit amid the pandemic, with nightclubs and restaurants around the world forced to close their doors and weddings and other celebrations happening on a much smaller scale, if at all.

Industry group CIVC estimated that champagne may have taken as much as a $1.2bn sales hit in 2020, with global champagne sales dropped by 18% in volume.

Meanwhile, LVMH’s wines and spirits sales fell 15% to €4.8bn in 2020, while operating profit declined 20% to €1.4bn. Overall, the company recorded revenue of €44.7bn in 2020, down 17%.

Last week LVMH said it was hitting the brakes on singer Rihanna’s Fenty fashion line “pending better conditions.”

The LVMH chief financial officer had said late last year that the line was a "work in progress."

“Adding another high profile champagne brand in the mix will help the group regain momentum as trade normalises. The deal makes sense on an operational level, with LVMH having a large, global infrastructure in place from which to expand the reach of the likes of Ace of Spade champagne," said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

"LVMH is seeing demand for champagne and cognac recover faster in the US," she added. "This deal is likely an attempt to capitalise on this positive trend. With a 50% stake being retained, the deal is unlikely to drastically move the dial at the group level. However, it should help things move in the right direction, and providing the price tag was right, this was an opportunistic move by LVMH."

Watch: How Jay-Z and Diddy used their fame to make millions in the spirit industry