Moët Hennessy Champagne sales slumped 35% in the first three months of this year.
Such a fall in the region's leading player reinforces the view that cash-strapped consumers are turning their backs on the category as the recession takes hold.
The LVMH drinks arm, which owns leading brands including Moët & Chandon, Veuve Clicquot, Ruinart, Mercier and Krug, said revenues from its Champagne and still wine business fell 22% in the first quarter to €197m.
Champagne volumes slipped 35%, it added.
'There's not much to celebrate these days, so the end demand is not that great,' said LVMH finance director Jean-Jacques Guiony. Consumers were economising in key markets like the UK and US, he added, trading down to cheaper sparkling wines.
The company said the slump was also caused by retailers and restaurants de-stocking, slimming down their inventories of Champagne as a way of cutting their costs.
The decline is in line with official shipment figures from the CIVC (Comité Interprofessionnel du Vin de Champagne), which showed a 34% fall in volumes in the first two months of 2009.
Shipments to EU countries excluding France were down 47%, domestic shipments fell 23% and exports excluding the EU plummeted 42%, led by declines in the US, Japan and Switzerland.
Meanwhile, LVMH has moved to deny speculation that it is in talks with UK drinks giant Diageo over the possible sale of Moët Hennessy, in which Diageo already has a 34% stake. 'LVMH confirms that no such negotiations are taking place,' the company said.
Reports have pointed out that this does not rule out informal discussions between the two companies. Analysts broadly agree that while the deal would be attractive for Diageo – the company lacks Champagne and Cognac brands – the benefits of a sale to LVMH are less clear.
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