LVMH said it was ‘impossible’ to control the final point of sale after the champagne shipment to Russia was reported.

PARIS (Reuters) – LVMH said on Tuesday it was “impossible” to control the final destination of products sold by third-party distributors, even after the French luxury group’s champagne stopped trading there, a report said.

French investigative media La Letre reported on Tuesday that the group’s drinks subsidiary, Moët Hennessy, was working with two third-party duty-free distributors in the US to ship cargo to the Russian market.

LVMH, which owns Christian Dior, Givenchy and Bulgari among other brands, said it would close boutiques in Russia in March 2022 and cease business following the country’s general invasion of Ukraine.

Many Western goods are still sent to Russia through intermediaries, also known as parallel imports, which are mostly legal, although many companies oppose such practices.

“Some (Moet Hennessy) distributors have export activities, so it is impossible for Moet Hennessy to control the final destination of the product marketed by the distributor,” an LVMH spokesperson said in response to questions about the report.

The person added: “Moet Hennessy and its partners carefully comply with the laws, regulations and international sanctions that apply to the products sold in the places where they operate.”

Although affluent Russians are very fond of luxury goods, the amount of luxury sales generated by Russian citizens is small compared to the industry’s main growth engines, China and the United States.

Since February, the wine and spirits division of LVMH, run by group finance chief Jean-Jacques Gioni and Alexandre Arnott, one of the five sons of group owner Bernard Arnault, has been struggling with a number of headwinds, including cognac-related trade tensions with China and weak demand. US

(Reporting by Tassilo Hummel; Editing by Mark Potter)