LVMH 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 wineries, renowned for its red table wines and premium insignia, and solidifies its penetration into its largest market in America. Terms of the deal were not disclosed.
Moet Hennessy President and CEO Philip Schus told CNBC that the company is looking for big winners around the world who have the same dedication to quality, craftsmanship and entrepreneurship as LVMH. Schaus 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 a 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 Mott Hennessy – whose dozens of brands include Dom Pérignon, Mott & 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 wine, and its Whispering Angel line offers rosé, but “we were missing a strong red wine,” Schus said.
Moet Hennessy reported revenue of 1.64 billion euros for the first quarter, up 8% from 2021. Schus 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 marginal decline in demand in the low-priced segment. But high-end consumers — looking for premium-priced products — continue to buy for now. “The heat will be intensifying, 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, Schus said the company was able to “catch” 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, Schus 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 hemp 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 uses only the highest quality grapes, so it is in demand much more than what nature has given us.”
Schus also highlighted Jay-Z’s co-owned champagne brand Armand de Brignac, whose gold bottles have become fixtures at flashy parties and clubs. brand. This, 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.