Major Workforce Reductions at Moët Hennessy

In a staggering move, Moët Hennessy is set to reduce its workforce by over 10% as new leadership aims to revive the company's performance amid a downturn in luxury sales.

A Shift in Strategy Under New Leadership

Jean-Jacques Guiony, the chief executive of Moët Hennessy, and Alexandre Arnault, his deputy, recently addressed employees, revealing plans to trim the workforce down to 2019 levels. With a current headcount of approximately 9,400, this means shedding around 1,200 jobs.

Guiony highlighted the reality that despite revenues returning to pre-pandemic levels, operational costs have surged by 35% since then. "This was an organisation that was built for a much larger size of business," he stated in an internal video.

Tactics for Workforce Reduction

The cuts will primarily be executed through natural attrition, with roles being reassigned within the company rather than outright layoffs. The timeline for these reductions remains unclear.

A spokesperson for Moët Hennessy emphasized that the decision reflects a need to recalibrate and align the workforce with current market realities.

Navigating a Tough Market

Since taking over in February, Guiony and Arnault have faced daunting challenges in a global alcohol market that has seen better days. While LVMH’s drinks division thrived from 2019 to 2022, it has recently experienced a significant slump, with Moët Hennessy reporting a 9% drop in organic sales in the first quarter—far worse than the 3% dip for the entire LVMH group.

Arnault pointed out the unusual nature of the current crisis, stating, "What makes this a bit unique is that all of our biggest divisions are struggling at once." Normally, when wines and spirits suffer, other sectors like fashion would be thriving.

A Pre-Planned Move?

Internal documents suggest that discussions about workforce reductions were already in motion before the pair took the helm. Hiring freezes have been in place since mid-2023, with intentions to cut hundreds of roles emerging last year.

Reports indicate that at least 70 employees in China were laid off already this year, part of a broader strategy to streamline operations.

Hope Amid Challenges?

Despite the gloomy outlook, Guiony reassured staff that the situation is cyclical. "Things are bad, but they will become better. This is a cycle," he remarked, while also acknowledging that external factors like U.S. tariffs are contributing to the uncertainty ahead.