US and Chinese demand for cognac prompts LVMH to open US$118 million bottling plant

Luxury goods maker LVMH hopes to be well on its way to remedying its cognac shortage within two years, billionaire boss Bernard Arnault said as its Hennessy label struggles to keep up with demand in the United States.

The distiller is dealing with low stocks and production problems, including hail and frost that have hurt recent harvests.

With no quick fixes likely – cognac is a double-distilled spirit that needs to be aged for at last two years – Hennessy is tackling production constraints with an eye on the longer term, by planting more vines, Arnault said.

“There is land within the area which is not being used,” Arnault, LVMH’s chairman and chief executive, told journalists at a new Hennessy bottling plant near the city of Cognac, on the banks of the Charente river in southwest France. The label works with 1,600 winegrowers there.

“We have a bottle shortage, given the success of our products across the Atlantic and in China,” he said.

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The acquisitive businessman – whose sprawling LVMH group includes fashion houses such as Louis Vuitton and champagne label Moët & Chandon – ruled out buying up rival cognac makers to fix shortages.