Jay-Z and LVMH pop the cork in champagne tie-up

Jay-Z and LVMH LVMUY 1.12% Moët Hennessy Louis Vuitton SE are joining forces in the Champagne business, further cementing the alliance between the world of hip-hop and luxury as the COVID-19 pandemic saps sales of the festive wine worldwide.

LVMH, the world’s biggest producer of Champagne, has taken a 50% stake in Armand de Brignac, the high-end Champagne brand owned by Jay-Z, the rapper and mogul. The brand, one of the youngest in the famed sparkling-wine region, is known for its metallic bottles that cost hundreds of dollars each.

The investment, LVMH and Jay-Z said, is aimed at growing Armand de Brignac through LVMH’s global distribution networks while drawing upon the conglomerate’s resources within Champagne wine country. It comes at a difficult moment for Champagne: The pandemic caused the cancellation of weddings, soirees and other occasions to pop corks, cutting sales of the wine by about 20% last year. The two sides didn’t disclose the value of the transaction.

“We were working really hard to maintain a brand that was growing faster than the staff we had and bigger than some of the expertise we had,” Jay-Z, born Shawn Carter, said in an interview. “We’d been in this 15 years, not a hundred.”

The partnership shows how European luxury brands are now embracing Black recording artists and hip-hop culture to appeal to a younger, more diverse clientele. Rihanna and LVMH launched a cosmetics line, Fenty Beauty. The rapper Gucci Mane and his namesake brand, the Italian fashion house Gucci, have collaborated on a collection. Dior, an LVMH brand, has used the rapper A$AP Rocky as a featured model in several menswear collections. Streetwear has become a staple of luxury fashion.

“I think that people have come to accept that these two worlds are a natural fit,” Jay-Z said. “In the beginning, it wasn’t a natural fit.”

Rappers have long peppered their lyrics with references to Dior, Louis Vuitton, Dom Pérignon and other brands. But until recently, the luxury industry kept its fans in hip-hop at a distance. One such perceived snub pushed Jay-Z to invest in Armand de Brignac.

Since emerging as a star in the 1990s, the Brooklyn-born rapper had been a devotee of Cristal, repeatedly name-checking the high-end Champagne brand in his rhymes. That changed when, in 2006, an executive at Cristal’s parent company was asked in The Economist whether the brand would be harmed by its association with rap. “That’s a good question, but what can we do?” he replied.

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Jay-Z soon organized a boycott of Cristal. Later in 2006, in the video for the single “Show Me What You Got,” he touted a new brand: Armand de Brignac, which called itself “Ace of Spades” and was launched earlier that year in the Champagne town of Chigny-les-Roses. The brand quickly put out a news release highlighting the mention.

Jay-Z was one of the early investors in Armand de Brignac, and in 2014, he bought out his partner, the spirits company Sovereign Brands. The Champagne brand is one of several businesses in the rapper’s portfolio, which also includes the talent agency Roc Nation and D’Ussé Cognac. Last month, he announced the launch of a fund to invest in minority-owned cannabis start-ups.

In Armand de Brignac, LVMH saw a label that was quickly drawing new Champagne drinkers to the high-end segment of the market, said Philippe Schaus, head of Moët Hennessy, LVMH’s spirits division.

“The bottle has a much more modern and audacious design,” Mr. Schaus said. “The way it was distributed—very much by word of mouth. Jay-Z wasn’t really apparent, but you were feeling that something was happening behind the scenes, which was making the brand work in a different way from other brands.”

Armand de Brignac has been produced by a small team inside the Cattier Champagne house, a family-run brand. Mr. Schaus said LVMH’s resources in Champagne—it owns about 4,000 acres of vineyards in the territory— would likely be tapped to boost the brand’s volumes in the years to come.

The deal arose from discussions started between Jay-Z and Alexandre Arnault, the 28-year-old son of French billionaire Bernard Arnault, LVMH’s chief executive and controlling shareholder. Jay-Z said he first met Alexandre a number of years ago in Paris on a trip with Kanye West. The deal advanced further after Bernard and Alexandre Arnault and Mr. Schaus met with Jay-Z several times at his home in Los Angeles, most recently this summer.

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Jay-Z said he expects to collaborate with LVMH on other projects in the future. The allure of luxury for rappers, he said, comes from the desire to celebrate after surviving the despair of the inner city.

“If you put yourself in the shoes of people who come from these neighborhoods, you can understand why someone who—five of their six friends have passed away—would want to celebrate life,” Jay-Z said. “We’re connecting with things that are well made, and things that survive.”

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