Hennessy Reaches Pay Agreement with Workers, Sources Report

• The agreement provides one-off payments of 6.8% of annual salaries with a minimum of around 3,200 euros ($3,817) and maximum of 6,500 euros per worker, preventing planned strike action
• LVMH's drinks division profits have halved over the past two years, with cognac sales particularly impacted by U.S. tariffs and sluggish demand in Hennessy's largest market
• Workers at LVMH's champagne brands Moet & Chandon and Veuve Clicquot remain in dispute, with the CGT union planning protests near Paris offices over cancelled profit-sharing and annual benefits

Summary: Hennessy Reaches Pay Agreement with Workers

Key Development: LVMH's Hennessy cognac brand has reached a pay deal with unions to compensate workers for bonuses lost in 2024 due to weak sales. The agreement, set to be formally signed Tuesday, includes one-off payments of 6.8% of annual salaries, with a guaranteed minimum of approximately €3,200 ($3,817) per worker and a cap around €6,500.

Labor Context: The deal brings relief to LVMH's drinks division, which has experienced rare strike action in the luxury sector. According to sources, the agreement means "there will be no strikes" at Hennessy. However, workers at sister brands Moët & Chandon and Veuve Clicquot continue labor disputes, with the CGT union calling for further action over lost bonuses and protests planned near LVMH's Paris drinks division offices.

Financial Performance: LVMH's drinks division, co-run by Jean-Jacques Guiony and Alexandre Arnault (son of CEO Bernard Arnault), has seen profits halve over the past two years. Cognac revenues have been particularly impacted by U.S. tariffs—Hennessy's largest market—combined with sluggish overall demand for alcoholic beverages.

Industry Context: The CGT union reports that Moët Hennessy cancelled profit-sharing and other annual benefits this year. Profit-sharing schemes are standard in France's wine and spirits industry, typically representing up to 15% of workers' annual compensation in strong years.

Market Implications: The labor unrest highlights operational challenges facing luxury conglomerates as they navigate weakening demand and trade barriers, potentially impacting margins and production in LVMH's key spirits portfolio.