Thursday, April 23, 2009

Moet Hennessy di Diageo???

I was chocked today of the rumours that LVMH would sell Moet Hennessy to Diageo...
"April 22 (Bloomberg) -- LVMH Moet Hennessy Louis Vuitton SA is not in talks to sell its wines and spirits unit to Diageo Plc, Olivier Labesse, a spokesman for the French luxury goods maker, said in a telephone interview. He was denying reports in U.K. newspapers that LVMH plans to sell two thirds of its stake in Moet Hennessy to Diageo for as much as 12 billion euros."

"In economics, a luxury good is a good for which demand increases more than proportionally as income rises, in contrast to a "necessity good", for which demand increases less than proportionally as income rises. Luxury goods are said to have high income elasticity of demand: as people become wealthier, they will buy more and more of the luxury good. This also means, however, that should there be a decline in income its demand will drop. Income elasticity of demand is not constant with respect to income, and may change sign at different levels of income. That is to say, a luxury good may become a normal good or even an inferior good at different income levels, e.g. a wealthy person stops buying increasing numbers of luxury cars for his automobile collection to start collecting airplanes (at such an income level, the luxury car would become an inferior good)."

"LVMH (Louis Vuitton Moet Hennessy) is the largest luxury good producer in the world with over fifty brands, including Louis Vuitton, the brand with the world's first designer label."

What will happen to the value of Moet/ Dom Perignon (see... I only think of champagne) if it will be sold to Diageo? There is nothing wrong with Diageo (I have worked for them), but it is not LVMH. I promise that I will keep on drinking Moet of course, but does it feel as prestige as it feels now. WOW! This is huge news... I need to sleep over night to think this again tomorrow...