Diageo can take little comfort from LVMH’s trading update, according to UBS.
"Overall, we think the topline results are a negative read-across for the European Spirits stocks," said the Swiss bank.
LVMH noted in the US depletion and sell-out were flat in the first quarter as the category is 'stabilising’
In China, Jan-Feb sell-out trends were down double-digits (sell-in worse than sellout), with the off-trade performing much worse than the on-trade, while Duty Free saw a significant uptick (increased outbound tourism to Japan).
For Diageo, which has a 34% stake in Moet Hennessy (the MH part) that makes up around 10% of earnings, there is a risk of second-half associate income from weak first-quarter sales and negative foreign currency headwinds.
Champagne sales, a key of the Moet Hennesey group, had a tough quarter as sales retreated after a post-Covid boom.
LVMH said wine and spirit sales fell 16% to €1.4bn (£1.2bn) due to lower champagne shipments while Hennessy cognac saw US demand slip again.