LVMH's Hennessy Averts Strikes with New Worker Pay Deal

Key Agreement Reached

Hennessy, a leading cognac brand under the LVMH umbrella, has successfully finalized a pay agreement with its unions. This deal averts potential strike action by compensating workers for bonuses lost amid weak sales.

The agreement includes a one-off payment equivalent to 6.8% of annual salaries, with a minimum payment of around 3,200 euros and a maximum of 6,500 euros per employee.

Situational Overview

The LVMH drinks division has experienced significant financial pressure, with profits halving over the past two years. This decline is largely due to US tariffs impacting cognac sales in its largest market and a broader sluggish demand for alcoholic beverages.

In response to the downturn, the company canceled profit-sharing bonuses, which often constitute up to 15% of a worker's annual pay in the French spirits industry and led to the labor dispute.

Impact on LVMH's Beverage Division

While the resolution at Hennessy brings a measure of stability, labor tensions persist within LVMH's wider drinks portfolio. The CGT union is proceeding with calls for strikes at the group's renowned champagne brands, Moet & Chandon and Veuve Clicquot, over identical bonus-related grievances.

This contrast highlights an ongoing challenge for the luxury conglomerate as it navigates operational headwinds while maintaining stable shareholder dividends.

Summary

The Hennessy pay deal is a positive development for LVMH, securing operations at its largest spirits brand. However, the unresolved disputes at its champagne houses suggest that labor relations and market pressures will remain a key focus for the company's beverage sector in the near future.

FAQ

Q: What did the Hennessy pay deal include?
A: The deal provided a one-time payment of 6.8% of annual salary, with a guaranteed minimum of approximately 3,200 euros and a cap of 6,500 euros per worker.

Q: Why were workers at LVMH's drinks division protesting?
A: They were protesting the cancellation of profit-sharing bonuses, a decision made after the division's profits fell sharply due to weak sales and US tariffs.

Q: Are other LVMH brands still facing strikes?
A: Yes, the CGT labor union continues to call for strikes at champagne brands Moet & Chandon and Veuve Clicquot over the same unresolved bonus issues.

Source: Reuters via Investing.com