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Why Moët Hennessy Should Leave LVMH Behind
- Vani Kumar
- Mar 7
- 3 min read
Updated: Mar 9
Conglomerates thrive on synergy, but what happens when two businesses under the same umbrella have fundamentally different trajectories? That’s the question investors are now asking about LVMH Moët Hennessy Louis Vuitton SE. With an enterprise value just shy of €360 billion ($377 billion), LVMH is the world’s most dominant luxury empire. But its wines and spirits division, Moët Hennessy, is increasingly seen as the odd one out.
Investor conversations about a breakup have moved beyond PowerPoint speculation to serious discussions. Splitting off Moët Hennessy could unlock billions in value for both entities. And while Bernard Arnault, the empire’s architect, has publicly dismissed the idea, recent moves suggest that even he may be weighing his options.
Luxury fashion and high-end alcohol are two very different businesses. While LVMH’s flagship brands—Louis Vuitton, Dior, and Tiffany—are driven by craftsmanship, exclusivity, and retail dominance, Moët Hennessy operates on an entirely different set of principles. Champagne and cognac are agricultural products, subject to supply chain fluctuations and regulatory constraints that don’t apply to handbags and watches.
This divergence is creating strategic friction. Analysts at Bernstein argue that Moët Hennessy’s presence in LVMH’s portfolio discourages some institutional investors from buying into the stock. Liquor holdings make the group off-limits for funds with alcohol restrictions, limiting the company’s investor base. More importantly, while LVMH trades at about 12 times 2026 EBITDA, Hermès commands a multiple of 32. Stripping out Moët Hennessy could push LVMH’s valuation closer to that of its pure-play luxury rival.
So how would a breakup work? One option is distributing shares in Moët Hennessy to LVMH investors, similar to how Richemont spun off its tobacco holdings in 2008. Another route would be selling the business to Diageo Plc, which already owns a 34% stake. A full sale could net LVMH tens of billions of euros, cash it doesn’t necessarily need but could use to double down on ultra-luxury fashion.
“LVMH’s power has always been in its brand ecosystem,” says Erwan Rambourg, global head of consumer and retail research at HSBC. “But Moët Hennessy doesn’t really fit that strategy anymore. If they were launching the business today, would they even put these two under the same roof?”
Recent executive reshuffling only fuels speculation. Longtime LVMH CFO Jean-Jacques Guiony was recently moved to CEO of Moët Hennessy, with Alexandre Arnault—Bernard Arnault’s son—appointed as his deputy. While Arnault Sr. insists Moët Hennessy is “not on the agenda” for a sale, he also said the new leadership team has two years to turn things around. Investors are left wondering: what happens after that deadline?
Adding fuel to the fire, when analysts pressed Arnault on whether LVMH was exploring strategic options for DFS (its duty-free business), he refused to comment—an omission widely read as confirmation. It’s a subtle but telling shift from the unwavering confidence LVMH usually projects.
Beyond financial considerations, a split could also simplify LVMH’s looming leadership transition. Bernard Arnault turns 76 this year, and his five children all hold senior roles in the company. Eventually, he will have to pick a successor or divide responsibilities. A separate, publicly traded Moët Hennessy could provide an elegant solution: one child leading fashion and jewelry, another overseeing wines and spirits. This structure would mirror the approach taken by Richemont’s Johann Rupert and other dynastic luxury houses.
“Succession is the elephant in the room,” says Luca Solca, senior luxury analyst at Bernstein. “Breaking up the business now could preemptively solve conflicts down the road.”
LVMH doesn’t need to sell Moët Hennessy for financial reasons—it generated over €10 billion in free cash flow last year. But strategically, a separation could unlock billions in shareholder value while allowing both businesses to thrive independently.
The only real question is whether Bernard Arnault, a man who spent 40 years meticulously constructing LVMH, is ready to break it apart. His track record suggests he will do whatever it takes to win. And with Hermès edging closer to LVMH’s valuation, Arnault may decide that streamlining his empire is the best way to keep his lead.
Investors are watching. The market is speculating. And Moët Hennessy may not stay under LVMH’s roof much longer.
