PARIS (Reuters) – LVMH said on Tuesday it was “impossible” to control the final destination of products sold by third-party distributors after a report said the French luxury group’s champagne reached Russia even after it halted business there.
French investigative media La Lettre on Tuesday reported the group’s beverages branch Moet Hennessy worked with two third-party duty-free distributors in the United States on shipments ultimately headed for the Russian market.
LVMH, which also owns Christian Dior, Givenchy and Bulgari among other brands, said in March 2022 it would close its boutiques in Russia and halt business operations there following the country’s full-scale invasion of Ukraine.
Many Western goods are still shipped to Russia through intermediaries, also known as parallel imports, which are mostly legal though many companies say they are against such practices.
“Some of (Moet Hennessy’s) distributors have export activities. It is therefore impossible for Moet Hennessy to control the final destination of a product marketed by a distributor,” an LVMH spokesperson said in response to questions about the report.
The person added that: “Moet Hennessy and its partners scrupulously comply with the laws, rules and international sanctions in force on products marketed wherever they operate.”
While affluent Russians are keen consumers of luxury goods, the proportion of luxury sales generated from Russian nationals is small compared to the industry’s main growth engines, China and the United States.
LVMH’s Wines & Spirits division, to be run from February by group chief financial officer Jean-Jacques Guiony and Alexandre Arnault, one of group owner Bernard Arnault’s five children, is grappling with multiple headwinds including cognac-related trade tensions with China and weaker demand in the U.S.
(Reporting by Tassilo Hummel; Editing by Mark Potter)
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