Moët-Hennessy

30 avenue Hoche
75008 Paris
France
(1) 563-0101

Public Company
Incorporated: 1971
Employees: 7063
Sales: FFr7.477 billion (US$1.162 billion)
Market Value: FFR14.183 billion (US$2.205 billion)
Stock Index: Paris Brussels

Moët-Hennessy, whose product lines includes Christian Dior perfurme, Dom Pérignon champagne, and Hennessy X.O. cognac, is a well-established and extremely successful French enterprise. What began as the business of a talented French vinter almost 250 years ago is now a world leader in the production of wines, spirits, cosmetics, and perfumes.

Claude Moët considered the Champagne region east of Paris, in the Marne River valley, to be an ideal location for wine production. He established a vineyard near Epernay, but became frustrated dealing with the courtiers en vin, or distributors, who took his wine to market. Instead of depending on them to sell his wine, Moët decided to buy one of the offices of courtiers en vin and sell the wine himself.

In 1743 Moët et Cie (Moët and Company) was formed. Joined by his son Claude-Louis, Moët quickly established customer accounts which included a number of landed gentry and nobles. In 1750 father and son established an account with Madame du Pompadour, who regularly ordered Moët champagne for the royal court at Compiègne. That same year Moët began selling champagne in Germany, Spain, Eastern Europe, and America.

Claude Moët died in 1792, leaving the company to his grandson Jean-Rémy, who laid the groundwork for the later success of Moët et Cie. He expanded the base of operations at Epernay by purchasing the vineyards of the Abbey of Hautvillers, where a century earlier the Benedictine monk Dom Pérignon perfected the double fermentation of wine to create champagne. However, it was Jean-Rémy’s friendship with Napoleon that helped the company attract a loyal international following.

Jean-Rémy became mayor of Epernay in 1802 and first met Napoleon two years later. Napoleon and his entourage were lavishly wined and dined by Jean-Rémy in newly built guest houses at the firm’s address, 20 avenue de Champagne. Champagne historian Patrick Forbes wrote of the period: “... everybody who was anybody in Europe was passing through the Champagne district en route from Paris to the Congress of Vienna and they all wanted to visit the celebrated champagne maker.... His 10 years in the Napoleonic limelight had made him the most famous wine-maker in the world and orders for his champagne began pouring in with such profusion that he hardly knew how to fill them.” Later, before abdicating, Napoleon rewarded Jean-Rémy for his generosity by giving him his own Officer’s cross of the Legion of Honor. Moët later dedicated its Brut Imperial in Napoleon’s honor.

Jean-Rémy’s customer list in the early 19th century had grown to include such famous people as Czar Alexander of Russia, Emperor Francis II of Austria (Napoleon’s father-in-law), the Duke of Wellington, Madame de Staël, Queen Victoria, and the Prince Royal of Russia (later to become emperor of Germany).

In 1832 Jean-Rémy retired and relinquished direction of the company to his son Victor and son-in-law Pierre-Gabriel Chandon de Briailles. To reflect the new partnership, the company’s name was changed to Moët et Chandon.

Victor and Pierre expanded the firm’s operations, and by 1879 Moët et Chandon dominated the Marne Valley with its introduction of more flavorful grapes from Cramant, Le Mesnil, Bouzy, Ay, and Verzenay. At this time Moët et Chandon employed close to 2000 people working as cellarmen, cork cutters, clerks, vineyard farmers, tinsmiths, needlewomen, basketmarkers, firemen, packers, wheelwrights, and stableboys. The company had even established a social security system for employees, which included free medical attention, housing assistance, pensions, maternity benefits, sick pay, and free legal aid.

Moët’s average annual sales were believed to have been about 20,000 bottles during the 1820’s. By 1872 that figure had risen to two million, and by 1880 it had reached 2.5 million. At the turn of the 20th century, Moët et Chandon’s clientele remained primarily within the upper echelons of society.

During World War I, bombs demolished the offices and guesthouses where Napoleon had dined. (Today the only remaining structures from the original property are two salons, used as reception rooms for visitors.) Despite the destruction, Moët et Chandon reaffirmed its place in the market in the late 1920’s by creating the Dom Pérignon brand of vintage champagne. Described by connoisseurs as the most perfect champagne available, Dom Pérignon also became the most expensive. The introduction of Dom Pérignon initiated a trend other champagne houses later followed: that of creating a premium brand, which placed other regular vintages second in status. Dom Pérignon, however, emerged as the most successful premium champagne.

Despite interruptions in its business during World War II, Moët et Chandon recovered quickly after the war, as a result of its prompt modernization of facilities. From the installation of new wine presses to a comprehensive system of work incentives, the goals of fairness and efficiency were emphasized in all aspects of production.

Count Robert-Jean de Vogüé, one of France’s most important wine buyers in the mid-1950’s, led the company to even greater success. Under de Vogüé, Moët et Chandon experienced its most rapid period of growth to date, marked by its transformation from a family-owned venture into a Société Anonyme, or corporation. A series of acquisitions, mergers, and diversifications expanded the company’s product line.

Moët et Chandon gained control of Ruinart Père et Fils (France’s oldest champagne house and Moët’s chief competitor) in 1962. The company acquired Mercier, another rival champagne house, in 1970, and soon thereafter purchased an interest in Parfums Christian Dior, marking the company’s first undertaking outside the champagne business. Moët et Chandon later completed its takeover of Dior, whose perfume products include Miss Dior, Dioressence, and Eau Savage.

Moët et Chandon merged with Jas. Hennessy & Company, France’s second largest cognac producer, in 1971. The new company, called Moët-Hennessy, enjoyed a broader financial base and was better able to stimulate the growth of its interests abroad. The merger of Moët and Hennessy was brought about mainly as a result of a 1927 statute which limited the Champagne growing region to 34,000 hectares. (The statute was intended to protect the quality of French champagne by discouraging price competition). While less than 25,000 hectares were under cultivation in 1970, Robert-Jean de Vogüé believed that growing demand for champagne would exhaust the supply of land by the year 2000. Until other regions suitable for champagne production could be found, de Vogüé decided that diversification through a merger with Hennessy would insure a stable future for Moët.

Moët-Hennessy established a firmer presence in the United States in 1973 when it opened the Domaine Chandon winery in Napa Valley, California, a location which proved ideal for the production of sparkling wines. The production of sparkling wines at Domaine Chandon grew dramatically and enabled Moët-Hennessy to expand in one of its most important foreign markets. The winery also reduced, somewhat, demand in North America for French champagne, whose production was still restricted by law.

Alain Chevalier, a protegé of de Vogüé, was chiefly responsible for the success of Domaine Chandon. He was named chief executive officer in the mid-1970’s, and has since transformed Moët-Hennessy into a less conservation company with more aggressive marketing strategies. After de Vogëé’s, death in 1976, Chevalier continued the diversification program started by his predecessor.

In 1977 Moët-Hennessy purchased the Rozes companies in Portugal and France in an effort to raise demand for champagne. The following year, the company purchased Roc, a French cosmetics firm specializing in hypo-allergenic make-up. The company also acquired Delbard, a French rose company, which was unable to continue financing the development of special new rose hybrids. The company also purchased Armstrong Nurseries of Ontario, California, the largest farmer of rosebushes in America. Moët-Hennessy is trying to apply rosebush cloning techniques to grape vines in order to produce better hybrids. As a result of these acquisitions, Moët-Hennessy became the world’s leading producer of roses. Chevalier, who became president of Moët-Hennessy in 1982, told Business Week, “Roses are a commodity. We can make them a brand name like champagne.” Losses incurred by both Roc and Armstrong, however, depressed Moët-Hennessy’s earnings. The introduction of a popular new perfume from Dior called Poison, however, largely covered those losses.

Continuing its expansion in the United States, Moët-Hennessy acquired its American sales agent, Schieffelin & Company, one of the oldest wine and spirit distributors in North America. Moët-Hennessy is one of the first French companies to use European Currency Units (or “ECU’s”), which are more stable in value against the dollar, and are therefore preferable for funding investments in the United States. Moët-Hennessy has yet to realize fully an $11.7 million investment in research and development made during 1983 and 1984. The company has, however, succeeded in creating advanced technology for the in vitro method of cultivating roses and vines. Moët scientists are also developing a method which uses encapsulated yeast pellets to speed fermentation without changing the taste of the product. This technique will reduce labor costs and create as much as 15% more space for aging. The company plans to license the technology to competitors if the experiments are successful on a larger scale.

In June 1987 Moët-Hennessy announced plans to merge with Louis Vuitton, a champagne and luggage concern. A new holding company called LVMH was formed to operate three separate businesses: Moët-Hennessy, Louis Vuitton, and Dior. Alain Chevalier was named chairman of LVMH, and Henry Recamier, the septuagenarian chairman of Louis Vuitton, was named executive vice-president. The merger strengthened Moët-Hennessy’s family control, and settled the question of management succession at Louis Vuitton. In addition to announcing the merger, Moët-Hennessy also completed a separate agreement with Guinness, the Irish brewing company, to cooperate in the distribution and marketing of each other’s products.

Moët-Hennessy is presently France’s leading champagne producer and exporter, its second largest cognac exporter, and the world’s largest exporter of perfumes and cosmetics. In keeping with its prestigious reputation for quality and innovation, Moët-Hennessy may be expected to develop new products while protecting and maintaining those which have made it famous.

Principal Subsidiaries

Jas. Hennessy & Co. (99%): Champagne Moët & Chandon (99.9%); Parfums Christian Dior Paris (98.8%); Setric Genie Industriel (99.9%); Pellisson (99.8%); Taransaud (99.9%); Distillerie de la Groie (99.9%); Champagne Ruinart (99.9%); Rozes France; Fines Specialties S.A. (99.9%); France Champagne (99.9%); Provital (99.7%); Champagne Mercier (99.9%); Roc (97.1%); Richemont (UK); Armstrong Nursuries Inc. (USA) (93.3%); Schieffelin & CO. (USA); Simi Winery (USA); Domaine Chandon (USA). The company also lists subsidiaries in Belgium, Brazil, Canada, Italy, Japan, Mexico, The Netherlands, Panama, Portugal, Switzerland, the United Kingdom, and West Germany.