LVMH said Champagne sales were down because people were too sad to celebrate.

LVMH’s Champagne and wine division generated $1.52 billion in revenue in the first half of the year, down 12% from the segment’s revenue last year, according to the company’s earnings report Tuesday. Sales in the U.S. were down but still above pre-pandemic levels, according to the report.

LVMH Chief Financial Officer Jean-Jacques Guione blamed the decline on “serious demand problems for Champagne,” which is typically associated with “celebration, happiness, etc.” LVMH’s Champagne brands include Veuve Clicquot, Dom Pérignon, Mercier, Krug and Moët & Chandon.

“The current global situation, whether geopolitical or macroeconomic, doesn’t seem to be causing people to open bottles of champagne and celebrate,” Guiony said on the company’s earnings call this week. “I really don’t know. In fact, our volumes are down double digits.” Guiony noted that the entire industry is “under severe pressure, especially in Europe,” as consumers grapple with rising consumer goods costs.

Are people really sad enough to drink champagne?

Given geopolitical and economic tensions, it’s not unreasonable to think that consumer sentiment could be linked to lower sales, especially for drinks associated with celebratory events.

“Seasonality and major events definitely influence consumer choices.” Sean GoldsmithCo-founder and CEO of a non-alcoholic beverage retailer Zero proofSay luck. “With the upcoming election and so much uncertainty surrounding it, people may be waiting for the right time to pop the champagne.”

Renee Zavislak, a licensed therapist based in California who counsels clients on alcohol consumption, says people are too sad to buy champagne, but for a slightly different reason. She says it may be because people realize that alcohol consumption only exacerbates negative emotions related to “political instability and environmental disaster.”

“People are finally realizing that alcohol only makes anxiety and depression worse,” says Zavislak. luck. “So, yes, in a very different sense, people are too sad to buy champagne, but it’s just because they’ve accepted that it’s only going to make them sadder. I can’t count the number of customers who have stopped drinking or cut down significantly.”

Whether it’s a lifestyle, health or mental health choice, consumers are increasingly turning away from alcohol in favor of nonalcoholic beverages, including N/A champagne, beer and other spirits. This has become a particularly popular choice among Gen Z consumers. In fact, a January survey by advertising firm NCSolutions found that more than 60 percent of those born between 1997 and 2002 said they plan to cut back on alcohol consumption this year.

“Wine sales and all alcohol sales are trending down across the board,” Goldsmith says. “Last year, wine sales were down 3%, which is the third straight year of decline for the industry.” “As individuals become more focused on wellness, especially Millennials and Gen Z, people are moving away from wine.” But sparkling wine sales in the N/A space are “still going strong,” meaning N/A consumers still want that familiar fizzy taste without the hangover.

Another factor contributing to the decline in champagne sales is the continued impact of inflation on consumer spending.

“With costs rising everywhere, people have less money to spend on champagne,” said Emma Versaw, head of alcohol business at the retail technology company. fastSay luck. “This is a time when consumers are opting for cheaper or more affordable options, so they are looking for brands that offer value or promotions.

“So there won’t be fewer celebrations, and there won’t be fewer extravagant celebrations,” she adds. For reference, a bottle of Moët typically costs about $60, but some exclusive bottles $6,000 or moreA bottle of Veuve Clicquot wine costs between $60 and $120 on average.

So how long will consumers remain stingy? Guiony says he doesn’t expect a turnaround anytime soon, adding that retailers who sell LVMH products seem similarly pessimistic.

“I don’t think the second half of this year… will be a significant improvement,” he said. “I do expect it to be less bad than the first half, but probably still negative.”