Diageo has held a 34% stake in LVMH’s Moët Hennessy division since the company’s formation in 1997, when the Guinness-Grand Metropolitan merger brought the holding along with it. For most of that history, the arrangement was treated as a stable, low-drama piece of Diageo’s portfolio. New reporting suggests it’s become something closer to a liability new CEO Dave Lewis may eventually have to confront.
The numbers tell part of the story. Diageo’s profit share from the Moët Hennessy stake and related joint ventures generated $455 million in the year ending June 2023. By 2025, as LVMH’s drinks division struggled through an industrywide downturn, that figure had more than halved to $219 million. But the deeper problem isn’t just market softness — it’s how the two companies have treated each other inside the partnership itself.
The relationship has been openly strained since 2020, when Moët Hennessy withheld €181 million in dividends owed to Diageo following the pandemic’s onset, a dispute that went to arbitration and reportedly kept the companies’ top executives from speaking to each other for years. Newly reported French accounts from their joint distribution venture show why the tension mattered commercially: Diageo brands consistently generated 60 to 75 percent of the venture’s profits, yet growth after the pandemic increasingly came from Moët Hennessy’s own labels instead. Diageo ultimately terminated that French joint venture last year, at a cost of $145 million, mostly in termination fees, and had to rebuild its own sales force and customer relationships from scratch.
Eight joint ventures remain, six of them run by Moët Hennessy, in categories where the two companies compete directly — including Scotch, where Diageo’s own Johnnie Walker doesn’t crack the top 10 brands by market share in France. Diageo could exit the wider stake outright through a buyback option, but only at a 20 percent discount to fair value, and with spirits valuations already depressed industrywide, few see the math working today. Lewis has signaled no interest in selling for now. Whether that holds once his turnaround plan takes shape is, as one analyst put it, the kind of arrangement that persists only until somebody decides to change things up.
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