LVMH’s The Moet Hennessy division announced Wednesday that it has acquired California winemaker Joseph Phelps Vineyards, as the French luxury goods giant continues to expand its beverage portfolio.
The deal gives Moet one of California’s best-known winemakers, renowned for its red table wines and premium insignia labels, and solidifies its penetration into its largest market in the Americas. Terms of the deal were not disclosed.
Moet Hennessy Chairman and CEO Philip Schus told CNBC that the company was looking for large winemakers around the world who had the same dedication to quality, craftsmanship and entrepreneurship as LVMH. Schous said, Phelps, which was founded in 1973 by pioneer winemaker Joseph Phelps, produces about 750,000 bottles per year and had the right mix of scale, brand, product offerings and quality to add to the Moet Hennessy portfolio .
“It’s an iconic name and an iconic winery,” he said. “It’s important to us that we’re getting a family business with a legacy and legacy. It’s very important that we keep that legacy.”
Phelps has become a staple of private wine cellars and steakhouses. The Insignia, a Bordeaux-style blend, typically retails for at least $250 per bottle, depending on the vintage.
The deal comes as Mot Hennessy — whose dozens of brands include Dom Pérignon, Mot & Chandon, Hennessy, Cloudy Bay and Belvedere — continues to boom in high-end champagnes, wines and spirits despite fears of recession and inflation.
Schus said Moet Hennessy aims to serve “all the different moments of consumption” – from aperitifs, champagne and fine-dining wines to bars, clubs and cocktails. The company’s Cloudy Bay brand covers white wines, and its Whispering Angel line offers rosés, but “we were missing a strong red wine,” said Schuss.
Moet Hennessy reported revenue of 1.64 billion euros for the first quarter, up 8% from 2021. Schuss said demand in Europe is “on fire”, thanks to the return of European tourism.
“We are seeing huge demand in Europe,” he said, “especially in resort towns and nightlife.”
In the US, Schaus said the company has seen a slight decline in demand in the lower-priced segment. But high-end consumers — looking for premium-priced products — continue to buy for now. “The heat will be strong, people are traveling and consuming,” he said. “After the summer, we could see a different situation. Inflation and prices are difficult to predict.”
While Moet Hennessy was constrained by supply chain problems in the first quarter, Schuss said the company was able to “catch up” to many of those issues.
“We think this quarter will be very strong,” he said.
The shortage of high-end Champagne, however, is not likely to end any time soon, Schaus said.
Dom Pérignon, Krug and other pricey brands are becoming difficult to find at some retailers and restaurants because supplies are limited. For example, Dom Pérignon, aged 10 years before being sold to the public, makes it difficult for flax supplies to meet exploding demand, Schus said.
“Every bottle I’ll sell in the next 10 years is already in the cellar,” he said. “And Dom Pérignon only uses the highest quality grapes, so we have more in demand than nature has ever given us.”
Schuss also highlighted Jay-Z’s co-owned champagne brand Armand de Brignac, whose gold bottles have become fixtures at lucrative parties and clubs. brand. That, he said, is rapidly catching up with nightclubs in Japan and the French Riviera and “clearly exceeded our expectations.”
“Even with Armand de Brignac, there is only a limited supply,” he said.