
Jay-Z Sold 50% Of Armand de Brignac To LVMH
PARIS, FRANCE — Entertainment mogul and entrepreneur Shawn Carter also known by his stage name Jay-ZÂ just inked a new partnership with LVMH.
Fifteen years after founding his Armand de Brignac prestige range following a public spat with the owner of Cristal Champagne, the Brooklyn-native has sold a 50 percent stake in the company to LVMH Moët Hennessy Louis Vuitton, joining a portfolio of prestigious brands including Dom Pérignon, Moët & Chandon, Ruinart, Krug and Veuve Clicquot.
With the partnership, which includes a global distribution agreement, LVMH is cementing its ties with the entertainment industry, and extending its reach into the high end of the Champagne market, after a year in which sales of French bubbly fell by a fifth due to the coronavirus pandemic. Financial terms of the deal were not disclosed.
Over the last 15 years, Jay-Z made waves with his striking gold bottles decorated with pewter Ace of Spades labels, appealing to a global and diverse customer base.
Philippe Schaus, chief executive officer of MoĂ«t Hennessy, the wines and spirits division of LVMH, said the luxury conglomerate headed by mega-billionaire Bernard Arnault was impressed by Armand de Brignacâs ability to challenge the rules of the Champagne category.
âWe had been following its success over the last few years and we thought, this is crazy. Most Champagne brands see very modest growth, and he was just shooting up through the ranks,â he told WWD in an interview in MoĂ«t Hennessyâs new offices located above the LVMH-owned department store Le Bon MarchĂ©.
Bernard Arnault and Schaus met with Carter at his Los Angeles mansion. Â
âWe tasted the Champagne and we said, yes, there is something to be done together, because obviously he doesnât have the same distribution network as MoĂ«t Hennessy,â Schaus recalled.
âWe are already global leaders with our prestige Champagne brands â Dom PĂ©rignon, Krug and the prestige cuvĂ©es of Veuve Clicquot and Ruinart â but Armand de Brignac has created another niche and in some respects revolutionized the prestige category, so we wanted to be part of that,â he added. âThey opened Champagne to a new clientele, so in that sense, itâs a great complement to our portfolio.â
In an internal video aimed at MoĂ«t Hennessyâs teams, Carter said the partnership felt like a natural next step.
âI couldnât think of anyone else or a better partner for this brand, Armand, that we built from scratch,â he said. âWhen we started this, the only goal was to build something that would last longer than us, stand the test of time, build something of the utmost class and taste, so you guys are perfect partners.â
Under the 50-50 structure of the deal, Carter and Moët Hennessy will have equal say in future decision-making.
âWeâre super excited to take this brand to the next level, as well as other ideas,â Carter said. âWeâre excited and canât wait to meet you guys in person, and looking forward to learning and hopefully bringing some new energy into the building as well. Partnership, you know, works both ways.â
Though he was widely reported to have purchased Armand de Brignac in 2014, he has been an investor in the brand since its inception.
It all started after FrĂ©dĂ©ric Rouzaud, managing director of Louis Roederer Champagne, was asked in an interview with The Economist in 2006 whether the popularity of its Cristal brand among rappers could hurt the image of the drink. âThatâs a good question, but what can we do? We canât forbid people from buying it. Iâm sure Dom PĂ©rignon or Krug would be delighted to have their business,â he said.
Carter responded by banning Cristal from his 40/40 Club sports bar in New York City. âI view his comments as racist and will no longer support any of his products through any of my various brands,â he was reported as saying at the time. To emphasize the point, that yearâs video for âShow Me What You Gotâ showed Carter sending away a bottle of Cristal, as an assistant proffers a bottle of Armand de Brignac.
Carter never appeared in ads for the brand, instead opting for organic placements.
âJay-Z never put himself forward. In fact, the majority of consumers are not aware that Jay-Z is the owner of the brand,â Schaus said. âHe operates behind the scenes. He really orchestrated the brand, he developed it. He made sure it was in the right places at the right time.â
On Instagram, Armand de Brignac markets itself as the #DrinkofChampions.
âJay-Z likes to say that the Champagne itself is like a winnerâs cup,â Schaus said.
There are four other cuvĂ©es in the range â a RosĂ©, a Demi Sec, a Blanc de Blancs and a Blanc de Noirs â with prices going up to $800, making it twice as expensive on average as Dom PĂ©rignon, the market leader in the prestige Champagne segment, according to Schaus. Armand de Brignac also produces the worldâs largest bottle of Champagne, the 30-liter Midas, weighing almost 100 pounds.
Unlike Dom Pérignon, which produces millésimes for particular years, Armand de Brignac is made using a blend of three different grape varieties from several years. Production is in the hands of Cattier, a Champagne house run by the same family for 13 generations.
âEach bottle is finished by hand with the application of French pewter labels and hand polishing. A small and highly skilled team of just 18 people touch a bottle from pressing the fruit to departure from the cellars in France,â the brand said in a joint statement with MoĂ«t Hennessy.
The label sells 500,000 bottles a year worldwide. North America and Asia account for around a third each, with Europe representing a little less. By comparison, LVMH sold 64.7 million bottles in 2019. Schaus declined to give a figure for 2020, but said Moët Hennessy performed slightly better than the Champagne sector as a whole, which saw sales fall by 20 percent.
âEvery market was down except for the United States, but significantly less than one might have expected,â he said, noting that people switched to drinking at home. Organic revenues in LVMHâs wines and spirits division declined by 14 percent last year to 4.7 billion euros, while profit from recurring operations was down 20 percent to 1.4 billion euros.
âThe wines and spirits market is increasingly cool, whereas before, it was seen as somewhat dusty and conventional,â he remarked. âThe fact that all these people are taking an interest in the sector is terrific. Through their investment and the energy they are putting into it, they are giving visibility to the category. Thatâs also very positive. Having said that, not everyone is pursuing the same degree of excellence.â
While it was initially distributed mainly through nightclubs, Armand de Brignac is now available in selected restaurants and wine stores, and has received positive reviews from industry publications, the executive noted.
âThey have very good ratings, they are respected as winemakers,â he said, countering those who have caricatured Ace of Spades as the hip-hop Champagne.
âItâs much more than that. Itâs a Champagne that represents success, power, high energy and celebrating life. Weâve had many discussions with Jay-Z about the fact that for him, it represents success, in particular his success as a self-made man. Heâs always wanted the best of everything. He wants the best cars, the best watches, the best houses â and naturally, the best Champagne,â Schaus said.
âHe never thought it would become such a big brand. He didnât create this brand to make money. He did it because he loves Champagne and he wanted to develop a brand that reflected his pursuit of excellence,â he added, popping the cork on a bottle of Brut Gold. âYou canât talk about Champagne without tasting it, as Iâm sure you will agree. It would be just absurd,â he said with a smile.
Since LVMH will only be able to ramp up physical production gradually, given the minimum aging period of three years for the Champagne, its focus initially will be on ensuring Armand de Brignac is available in all the right places â including, presumably, the properties of its luxury travel division Belmond, which include the Venice Simplon-Orient-Express train and hotels such as the Copacabana Palace in Rio de Janeiro.
âOur dream customers are high-net-worth individuals who will choose Armand de Brignac to treat themselves, to celebrate and to express themselves through the daring choice of an exceptional bottle of Champagne,â he said. âItâs unique. No other bottle in the entire wines and spirits sector looks like it, so when you take a picture of yourself with Armand de Brignac, youâre sure to be recognized as discerning.â
The deal is set to reverberate beyond the companyâs Champagne division.
âWe are extremely pleased with this partnership. It is intellectually enriching and will help us understand different ways to market and develop a brand. What Jay-Z and his teams have done is absolutely exceptional and breaks the mold for marketing wines and spirits,â Schaus said. âBeyond the project itself, it also injects modernity and energy into MoĂ«t Hennessy and LVMH.â
Photos Credit: Raven Varona/Courtesy of LVMH
Source: WWD