With the Spring Festival less than ten days away, the spirits market is entering its peak consumption season.
Similar to premium Chinese baijiu, cognac has traditionally been a preferred choice for high-end gifting and business banquets during this period, typically experiencing pre-holiday price increases.
In the Chinese market, the most recognized cognac brands are the "Big Three" (Martell, Rémy Martin, and Hennessy). In markets with established brandy consumption habits, such as Guangdong and Fujian, Rémy Martin VSOP, Martell Noblige VSOP, and Hennessy VSOP are the most common products at local banquets.
In recent years, the competitive landscape among the "Big Three" has been shifting.
Hennessy was long the highest-priced brand among the three. Having entered the Chinese market over a century ago with advertisements in Shanghai and Guangzhou, it consistently emphasized its premium brand image.
However, over the past two to three years, Hennessy has moved away from strictly maintaining its high price point. Instead, it has adopted a "volume-for-price" strategy through price reductions and refraining from following competitors' price hikes, thereby narrowing the price gap with the other two brands. Furthermore, last year, Hennessy updated the packaging for its VSOP and XO products in the Chinese market, aiming to strengthen channel leadership through product iteration.
By this year's Spring Festival, Hennessy has even gained a price advantage in some cases.
Current market checks on major e-commerce platforms reveal that, taking the mainstream VSOP category as an example, the price for a 700ml bottle of Hennessy VSOP has fallen to levels on par with or even below comparable competing products. Some third-party sellers are offering prices just over 300 yuan, or even below 200 yuan. While the official channel price for Hennessy XO remains stable, third-party liquor stores are selling it for under 1,000 yuan.
This contrasts sharply with previous years during favorable market conditions, when a 700ml bottle of Hennessy VSOP typically cost over 600 yuan, often being tens to over a hundred yuan more expensive than Martell Noblige VSOP or Rémy Martin VSOP. Hennessy XO previously commanded prices around 1,000 yuan, even approaching 2,000 yuan at one point, generally costing 100-200 yuan more than XO products from the other two brands.
This significant adjustment in pricing reflects a change in Hennessy's operational strategy in China and, more broadly, the ongoing challenges faced by LVMH's spirits division.
A reversal in supply and demand has led Hennessy to adapt to market conditions.
Consumers familiar with purchasing cognac will notice that Hennessy's prices have recently become quite competitive.
For instance, the final price for a 700ml Hennessy VSOP is around 454 yuan on JD.com's self-operated "Hennessy JD.com Flagship Store" and 517 yuan on Hennessy's own "Hennessy Official Flagship Store" on the same platform. On Taobao, the official Hennessy flagship store offers it for 535 yuan, while Tmall Supermarket prices it at 484 yuan.
Prices are even lower from third-party stores sourcing products through overseas channels, often dropping into the 300-yuan range, with many stores offering prices just over 300 yuan or even below.
For example, as Hennessy does not have direct official partnerships with Pinduoduo or Meituan, products on these platforms come from liquor distributors. After subsidies on Pinduoduo, the price for this key product can be as low as 339 yuan, and around 311 yuan after subsidies on Meituan's flash sale channel.
Consequently, Hennessy's price gap with competitors has significantly narrowed, and it has become cheaper than rivals on some channels.
Checks show that a 700ml bottle of Rémy Martin VSOP is priced at 429 yuan on Rémy Martin's brand-operated "Rémy Martin Official Flagship Store" on JD.com and 434 yuan on JD.com's self-operated "Rémy Cointreau JD.com Zone." On Taobao, Tmall Supermarket offers it for 440 yuan, and the Rémy Martin official flagship store prices it at 454 yuan.
A 700ml bottle of Martell Noblige VSOP is priced at 521 yuan on Tmall Supermarket, 576 yuan on the Martell Tmall official flagship store, 489 yuan on the Pernod Ricard JD.com self-operated store, and 546 yuan on the Martell JD.com official flagship store.
Across JD.com, Taobao, and Pinduoduo, the lowest price for Rémy Martin VSOP 700ml remains above 300 yuan. Only Martell Noblige VSOP 700ml is available from some third-party liquor sellers on Taobao for under 300 yuan, also representing non-official imports.
"In previous years before Spring Festival, even during promotions, Hennessy VSOP prices wouldn't drop below 450 yuan. Those online prices in the two-hundred-yuan range are unofficial imports. With the packaging change last year, old stock needs to be cleared quickly," explained a Guangzhou-based imported spirits distributor.
Although the official channel price for Hennessy XO remains stable, the gap with third-party seller prices is widening.
On brand flagship stores and platform official channels/self-operated stores on JD.com and Tmall, Hennessy XO 700ml maintains a high price point between 1,500 and 1,700 yuan. However, many third-party stores are now offering it for under 1,000 yuan.
This price decline did not happen overnight.
From 2021 to 2022, Hennessy VSOP 700ml remained in the 600+ yuan range, and XO in the 1,800+ yuan range, higher than comparable products from Martell and Rémy Martin.
At that time, Hennessy was also confident in implementing small price increases—typically 3% to 5% annually during favorable market conditions. This was especially true in 2022 when overall brandy imports to China, by volume and value, declined by about 20%, creating a supply shortage.
However, an inflection point in the supply-demand balance was quietly approaching.
Attracted by the cognac boom, many distributors imported large quantities of unofficial goods through various overseas channels. They failed to anticipate the rapid shift in market conditions, and much of this stock subsequently became channel inventory.
In 2023, brandy made a strong return to the Chinese market, with import volume and value achieving double-digit year-on-year growth.
That year, including Hennessy, imported spirit companies actively participated in major e-commerce promotions. Post-promotion prices declined, and Hennessy's prices began to soften.
The widening price gap between unofficial and official imports directly impacted price discipline.
In 2024, Hennessy took the lead in proposing price reductions. The procurement prices for several 1L products were lowered by 50 to 400 yuan, aiming to strengthen the competitiveness of official imports and combat the proliferation of unofficial goods. As a result, Hennessy VSOP prices in some channels fell below those of Martell Noblige VSOP for the first time, while XO prices became roughly comparable to Martell's.
By this time, the market was already struggling to sustain price increases. In 2024, Chinese brandy import volume and value both saw significant declines of around 20%, and this downward trend intensified in 2025.
In 2025, both Martell and Rémy Martin continued with slight price increases, but Hennessy did not follow suit.
"In previous years, channels were eager to secure stock. Now, brands are proactively approaching distributors. Many still have old inventory; how can they raise prices?" the aforementioned liquor distributor commented.
After several years of counter-cyclical price adjustments, Hennessy's overall price positioning has moved closer to its competitors, thereby helping to maintain its market competitiveness.
Hennessy's performance drags on LVMH results; new leadership commits to long-term investment.
The price adjustments at Hennessy occur against the backdrop of persistent pressure on LVMH's spirits division.
In 2025, LVMH group's overall revenue declined by 5% year-on-year, while recurring operating profit and net profit fell by 9% and 13%, respectively.
Among its four business segments, the Wines & Spirits division was the worst performer for the entire LVMH group.
The "Wines & Spirits" department saw a 9% revenue decline in 2025 (a 5% organic decline), marking the second consecutive year of revenue decrease. Profitability continued to contract significantly, with recurring operating profit plummeting 25% year-on-year in 2025, far exceeding the group's overall 9% decline in recurring operating profit.
Compared to the profit peak in 2022, the profit scale of the Wines & Spirits division has nearly halved within three years. The operating margin dropped to 19% in 2025 from 23.1% in 2024, a significant decline from the over 30% margin achieved in 2022.
A deeper analysis reveals that the spirits business, represented by Hennessy, is the primary drag on the wine and spirits performance—the "Champagne & Wines" segment stabilized in 2025, with organic revenue flat compared to the previous year. In contrast, the "Cognac & Spirits" segment saw revenue decline by 15% (12% organic decline) over the past year.
LVMH stated in its financial report that the persistently challenging environments in the US and China, its two core markets, are the main reasons for the underperformance of the wines and spirits business, particularly cognac. Hennessy derives more than half of its global sales volume from these two markets. Weak demand, combined with increased tariff costs eroding price competitiveness, led distributors to reduce order quantities, directly impacting its performance.
Weak demand is not a challenge unique to Hennessy but is an issue facing the entire cognac industry.
The French National Interprofessional Bureau for Cognac (BNIC) reported that cognac exports in 2025 hit their lowest level since the 2008 financial crisis, at only 141 million bottles, with industry inventory levels reaching a record high equivalent to 11 years of supply.
In the Chinese market, the business banquet and gifting scenarios crucial for premium cognac have further weakened over the past year or two. Many consumers are shifting towards more cost-effective whiskies or mid-range brandies, leading to a prolonged inventory turnover cycle for cognac overall.
In response to the performance challenges, LVMH initiated significant adjustments.
Starting in May 2025, LVMH's Wines & Spirits department began global layoffs, targeting a reduction of approximately 10% of its workforce, aiming to return personnel costs to pre-2019 levels.
Management also underwent a "reshuffle."
In February 2025, LVMH Group's CFO assumed the role of Chairman and CEO of Moët Hennessy. Alexandre Arnault, second son of LVMH Group Chairman Bernard Arnault, was appointed Deputy CEO of Moët Hennessy.
In May, Charles Delapalme officially succeeded Laurent Boillot as President and CEO of Hennessy. Delapalme crossed over from the fashion industry, having previously served as CEO of Christian Dior Couture and Miu Miu.
Making his debut at last November's China International Import Expo, Charles Delapalme announced new products, including the inaugural 2026 Year of the Horse limited edition cognac. He also revealed plans to expand distribution channels in China, targeting East, West, and North China regions, and expressed a commitment to patient, long-term investment in cultivating new markets.
"Global markets are cyclical. We operate in over 160 countries; some are experiencing rapid growth, while others are growing more moderately, but cycles ultimately always turn upward. In the spirits industry, time is on our side," stated Charles Delapalme.
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