At a glance
- LVMH’s Wines and Spirits division grew 5% organically in H1 2026 to EUR 2,598 million, with operating profit up 11% to EUR 582 million.
- The group explicitly cited signs of recovery for champagne and cognac, the first such language in two years.
- Cognac shipments had fallen to 141 million bottles, the lowest level since 2009, triggering the first coordinated vine removal since the late 1990s.
- Remy Cointreau’s first-quarter update, published on 29 July, is the next real test of the trend.
For two years, every set of results from the spirits sector arrived with the same vocabulary: destocking, normalisation, headwinds, discipline. On 27 July, LVMH used a different word. Its Wines and Spirits division reported organic growth of 5% and an 11% rise in operating profit, and the group attributed it to signs of recovery in champagne and cognac. After a downturn that pushed cognac shipments to their lowest level since 2009 and forced producers to uproot vines, that is a genuine inflection. Whether it is the beginning of a cycle or a favourable comparison is the question worth spending time on.
What LVMH Actually Reported
The Wines and Spirits division posted revenue of EUR 2,598 million over the first half, up 5% organically, with recurring operating profit rising 11% to EUR 582 million. Two details give that figure weight.
First, profit grew faster than revenue. In a category that has spent two years cutting to protect margin, an 11% profit increase on 5% revenue growth means the cost discipline is working rather than simply masking decline.
Second, the growth was supported by volume rather than price alone, with demand improving particularly in Europe and Japan. Volume recovery is the harder and more meaningful signal. Price-led growth in spirits usually means the same bottles moving at higher prices to the same shrinking base. Volume means people are drinking it again.
Key figure141 million bottles. Cognac shipments at the low point of the downturn, the weakest level since 2009, according to the BNIC producers’ trade body.
How Bad It Got
To read a 5% recovery correctly you have to remember what it is recovering from. The cognac downturn was not a soft patch, it was a structural crisis.
- Shipments fell to 141 million bottles, the lowest since 2009.
- Producers began uprooting vines, the first coordinated removal since the late 1990s, deliberately cutting production capacity.
- Martell, one of Pernod Ricard’s flagship cognac brands, saw Chinese sales fall more than 20% year on year.
- Producers cut staff across the region.
The share prices tell the same story with brutal clarity. Over three years, Diageo fell around 55%, Pernod Ricard around 69% and Remy Cointreau around 70%. Those are not cyclical corrections, they are the market repricing an entire business model built on premiumisation, heavy ageing stock and Chinese growth.
The Structural Problem Nobody Has Solved
Volume recovery is welcome, but it does not address the deeper shift in how people drink. Diageo’s chief executive Dave Lewis framed it plainly earlier this year: consumers are drinking spirits on more occasions, but in smaller quantities, and they are trading down.
That is a difficult sentence for a category whose economics depend on the opposite behaviour. Ageing stock is expensive to hold. A house that fills its cellars expecting premium demand and then meets a trading-down consumer carries the cost for years. The industry discovered, painfully, that ageing warehouses are not vaults, they are bets on future demand.
Remy Cointreau’s response has been the most explicit. Its three-year RC Forward plan, launched under chief executive Franck Marilly, streamlines distribution, reworks pricing and product mix, cuts waste in procurement and investment, and flattens the structure to speed up decisions. The group closed its year to March 2026 with sales of EUR 935.3 million, up 0.2% organically, recurring operating profit down 11.5% organically to EUR 165.4 million and net profit down 26.7% to EUR 79 million. We covered the strategic reset in detail in our read on Remy Cointreau’s cognac momentum.
Good to knowCognac’s exposure to China is not simply a demand story, it is a regulatory one. Chinese trade measures on European brandy hit the category alongside falling consumption, which is why the collapse was faster and deeper in cognac than in Scotch or tequila over the same period.
The Recruitment Problem
The most interesting move in the category is not a cost cut, it is an admission. Remy Martin launched Remy V in the United States in March: a 35% ABV white spirit distilled from 100% French grapes. It is deliberately not a cognac. It is aimed at drinkers who are not currently engaged with the brand or the category at all, pitched at summer drinking and bright, fruity, floral notes.
Think about what that represents. One of the most prestigious names in brown spirits concluded that the fastest way to grow was to sell something that is not its core product to people who do not want its core product. Pernod Ricard has been running a similar play behind Martell Blue Swift. The category is trying to buy itself a new generation, and it is doing so from a position of weakness rather than strength.
Champagne faces a gentler version of the same challenge. The prestige tier holds up because it functions partly as a collectible, a dynamic we explored in the champagne of the elite. The volume tier does not have that protection.
Key takeawayChampagne and cognac have stopped falling, and the profit response shows the cost work landed. But the recovery is being measured against a 2009-level floor, and the consumption habits that caused the crash have not reversed. This is stabilisation, not a return to the old model.
What to Watch Next
Three markers will tell you whether this holds.
- Remy Cointreau’s first quarter, published on 29 July, is the purest read available. Remy has the highest cognac exposure of the major groups, with no beer, no Sephora and no fashion division to smooth the numbers.
- China. Nothing structural improves for cognac until Chinese demand stabilises. European and Japanese volume growth is real, but it does not replace the market that drove the last decade.
- Trade policy. Tariff arrangements between the United States and Europe remain a live variable for a category that exports almost everything it makes, and one we tracked through the strategic reset in French exports.
Bottom Line
LVMH’s 5% organic growth and 11% profit increase are the first credible evidence that champagne and cognac have found their floor. The volume component makes it more convincing than a pricing-led rebound would have been. But the category is recovering toward a smaller normal, not the one it left in 2022, and the houses that adapt fastest will be the ones that accept that. For collectors, the more interesting consequence is that scarcity at the very top has not moved at all, as the market for pieces like the Louis XIII Year of the Horse decanter continues to demonstrate.
FAQ
Why are cognac producers uprooting vines?
To cut production capacity and rebalance supply after shipments fell to their lowest level since 2009. It is the first coordinated removal in the region since the late 1990s, which indicates how serious the oversupply had become.
What is RC Forward?
Remy Cointreau’s three-year transformation plan, which streamlines distribution, improves pricing and product mix, reduces waste in procurement and investment, and speeds up decision-making through a leaner structure.
Is Scotch whisky in the same position as cognac?
Not to the same degree. Cognac’s collapse was amplified by Chinese trade measures on European brandy alongside falling consumption, an exposure Scotch does not share in the same form. Both categories face the same trading-down consumer, however.
Does the recovery apply to collectible bottles?
The collectible tier has behaved differently throughout. Rare and limited releases have held up on scarcity rather than consumption, which is why prestige launches continued through the downturn while volume brands were cutting.
