00:00:00: I think all the leaders like myself, they struggle every day with complexity.

00:00:06: This is what keeps us away at night in every part of OPD.

00:00:10: Welcome to the special English edition of Degorsa Neustadt,

00:00:15: a German podcast series by Zabilla Baden,

00:00:18: in which she talks to pioneering leaders who, inspired by the World Economic Forum's

00:00:23: Great Reset Initiative, create revolutionary projects that actually do make our world

00:00:28: smarter, greener and fairer.

00:00:31: Today we are joined by Philippe Chauss, CEO of Moet Hennessey,

00:00:38: and a visionary in sustainable luxury.

00:00:41: As part of Louis Vuitton Moet Hennessey, LVMH, the world's largest luxury group,

00:00:48: Moet Hennessey is deeply committed to environmental responsibility.

00:00:52: Under Philippe's leadership, they launched the World Living Soils Forum,

00:00:56: addressing the soil crisis and championing regenerative agriculture.

00:01:01: Philippe has also committed the company to ambitious carbon reduction targets,

00:01:06: approved by the Science-Based Targets Initiative.

00:01:09: With iconic brands like Moet and Chandon, Don Perignon and Hennessey,

00:01:14: Philippe is redefining luxury as both prestigious and purpose-driven,

00:01:19: setting a new industry standard.

00:01:22: Good morning, Philippe. There is a lot to talk about.

00:01:26: Good morning.

00:01:28: Should we start right with your personal commitment to sustainability?

00:01:35: What does it mean to you and how does it guide your leadership at Moet Hennessey?

00:01:42: I would say sustainability is in a certain way a guiding business principle.

00:01:50: You want our planet to be sustainable, you want our companies to be sustainable,

00:01:54: you want the business to be sustainable, everything goes together.

00:01:57: So sustainability is not just environmental issues.

00:02:00: It's about creating a future where business thrives,

00:02:04: while we positively impact the planet and society.

00:02:08: So it is about preserving resources for future generations,

00:02:15: but it's also about supporting social equity and creating long-term economic stability.

00:02:21: Now, when I think about where our sustainability vision comes from,

00:02:26: I mean, we did not invent anything at Moet Hennessey, or I did not invent anything.

00:02:30: If you see, Moet Hennessey is the sum of about 27 different houses or maisons,

00:02:37: like you named already a few of them, Don Perignon, or Moet and Chandon,

00:02:41: or Hennessey, or Belvedere Vodka, and these maisons are between,

00:02:46: many of them are between 100 and 300 years old.

00:02:49: And so if you think about how many generations you need to transmit a business

00:02:54: from 250 or 300 years ago to today, it's many, many.

00:02:59: And what happens in the transmission is, of course, I mean,

00:03:03: transmission and sustainability is almost saying the same thing.

00:03:06: You can only transmit something which is sustainable.

00:03:09: And so sustainability is always in part of the idea of these very maisons.

00:03:16: So when a father of, let's say, Nicolas Rinaire transmitted Rinaire to me some,

00:03:21: or Madame Cliqueau transmitted Berth Cliqueau to some,

00:03:24: I mean, what they really transmitted is what?

00:03:27: Well, they transmitted, of course, ways of working,

00:03:30: in which there were social practices that transmitted a business.

00:03:37: They transmitted a customer book.

00:03:40: They transmitted a savoir faire, a way, a know-how.

00:03:45: They transmitted, of course, machines and equipment and buildings and all that,

00:03:49: and they transmitted lands.

00:03:51: And the land was at the core of everything.

00:03:53: You know, when you talk about the winery, for instance,

00:03:56: the first thing they will tell you is how much land they have.

00:03:59: I have a 40-acta winery or I have a three-acta winery.

00:04:02: So the land was, from the beginning, very important.

00:04:04: That's where the biggest value was.

00:04:06: And so, of course, land had to be kept in a sustainable way.

00:04:10: You had to use it in a way which would ensure that future generations would be able to do the same thing

00:04:17: than you had done in your generation.

00:04:19: And so the notion of, and that's where the notion of living source came,

00:04:23: which we are going to talk later on about,

00:04:25: but this message, while I'm saying right now, is just to say we didn't invent anything.

00:04:31: We just borrowed from our predecessors some good practices

00:04:36: which ensure that businesses are built for the eternity.

00:04:40: And you know, LVMH is a family-owned business,

00:04:43: and a family wants to be there for the eternity and to transmit it over future generations.

00:04:47: So that's where sustainability is, of course, a key to all of LVMH,

00:04:53: and in particular to more density, which is a very unique business

00:04:57: because we go from nature to communities.

00:05:00: We start with soils and we finish with restaurants and bars and drinking a glass at home.

00:05:07: So sustainability is not a trend.

00:05:11: It's not a short-term goal, but it's a guiding principle which we have borrowed from the past,

00:05:16: which we have made evolve, where we're using new technologies,

00:05:20: new ways of looking at things, but also a new sense of urgency, maybe,

00:05:24: because we know that our planet is threatened,

00:05:27: and so we need to do all parts of the job to reduce that threat to the planet.

00:05:34: So there's more of a sense of urgency, but the principles have always been the same.

00:05:38: So we have created, when I joined at my tenacity workshop,

00:05:41: we created a dedicated sustainability department,

00:05:45: and in that we defined a program which we called Living Soils, Living Together.

00:05:53: And this program has really four chapters,

00:05:57: and the biggest one is about regenerating and protecting our soils.

00:06:01: So that is about practices in viticulture, like cover-crapping, or eco-grazing,

00:06:07: agroforestry, or creating green corridors for biodiversity.

00:06:12: So that's the soil part.

00:06:14: We have a second one which is mitigating our climate impacts,

00:06:17: which is, like everybody else, I guess, finding ways to reduce our carbon footprint.

00:06:22: So that can be that, for instance, in distillery in Poland,

00:06:25: we are going to use residues from the wood industry to heat the distillery,

00:06:32: rather than using gas.

00:06:34: It's about, of course, buildings which are well-isolated.

00:06:39: It's about using solar cells and all these things.

00:06:41: So that's the climate impact, and carbon footprint, of course, is part of that.

00:06:46: Then, thirdly, it's engaging society, and that is about different actions we have.

00:06:52: I mean, a very important one is our commitment to sustainable, to responsible drinking.

00:06:59: We know alcohol is a great alcoholic.

00:07:02: Our products are fantastic.

00:07:03: They are great products.

00:07:04: They create wonderful moments, but they should be consumed in a responsible way.

00:07:09: So that is, again, engaging society, where, for instance,

00:07:13: our partnership with the International Alliance for Responsible Drinking, the IRD,

00:07:18: which we joined in October 21.

00:07:20: It's a living industry group dedicated to the promotion of responsible drinking.

00:07:24: But there are other things.

00:07:25: We have also an initiative called LIFE,

00:07:28: in which we launch together with our sister, Brand Louis Vito,

00:07:32: where we help hundreds and hundreds of people in France

00:07:35: coming from unfavorable backgrounds to a new way of left the job market,

00:07:40: where they are no longer capable of finding a job,

00:07:43: to help them create a new life for themselves, to create a new vision for themselves.

00:07:48: And that has been very successful.

00:07:50: And then the last of the four big points, so regenerating souls,

00:07:53: mitigating climate impacts, engaging society.

00:07:56: The last one is empowering our own people and empowering people.

00:07:59: There, it's really about, of course, developing our people.

00:08:02: It's about managing practices.

00:08:04: It's about well-being in a company that is the fourth pillar of this plan.

00:08:12: So sustainability is not a marketing tool.

00:08:15: It is important.

00:08:17: It's critical.

00:08:18: It is a sense of urgency.

00:08:20: We have good years, like 21, 22, and 23.

00:08:25: We have more difficult years, like this year.

00:08:27: But even when the business environment is more challenging, like this year,

00:08:31: we remain steadfast in our commitment to sustainability,

00:08:34: because it is a core responsibility and a drive of long-term resilience.

00:08:38: So we have a special responsibility,

00:08:41: and then we strive to be in harmony with our environment,

00:08:46: both people and nature,

00:08:48: and to live and act according to the philosophy of the original founders

00:08:53: of these wonderful mesons.

00:08:55: Yeah, you have a very holistic approach to business and sustainability.

00:09:00: And from what I hear, land and its soil are your biggest assets.

00:09:09: So, Pilip, could you give us the state of the soil in 2024?

00:09:20: Yeah, I mean, first of all, we have to say that soil is crucial on the planetary base.

00:09:27: So, you know, more than 50% of the world's living species are found in soil.

00:09:35: One gram of soil in your hand has about as much individual organisms

00:09:42: than there are human on earth.

00:09:44: So it's very, very rich on healthy soil.

00:09:46: Soil retains water, filters water,

00:09:49: so it's a positive development of flora and fauna.

00:09:52: It's a source of all our food.

00:09:54: It also captures carbon and regulates the climate.

00:09:58: And yet, if we believe the studies of the FAO,

00:10:03: they have shown that almost 40% of the world's soils are degraded.

00:10:08: They are degraded through erosion, through pollution, through salinization,

00:10:13: loss of biodiversity, artificialization, and intensive agriculture.

00:10:19: Now, the viticulture is one of these industries which have been intensive in this agriculture.

00:10:25: And so we are co-responsible.

00:10:28: And so we have to, we look first at our own lands and our viticulture,

00:10:36: and actually agriculture and viticulture represent 23% of carbon emissions.

00:10:41: And our response for loss of biodiversity.

00:10:44: So we look first at what we do, and we look at what our industry does.

00:10:48: And then we look at the planet as a whole and see what can we do to contribute to that.

00:10:53: But if we lose more soils, it will have massive impacts on the climate change

00:11:00: and massive impacts on humanity and the ability of the planet to feed the humanity.

00:11:07: Can I come back to that astonishing number of 40% of soil that's already degraded?

00:11:15: What does it actually mean?

00:11:18: Let's go to the, because you heard luxury, to the Champagne region and the wine region.

00:11:24: What does it mean for the farmers, for all the stakeholders?

00:11:29: Well, I mean, the land in Champagne is not degraded, but it has been impoverished by monoculture.

00:11:37: And so what we are doing in Champagne, we are bringing back hedges.

00:11:41: We are bringing back bio corridors.

00:11:43: Bio corridor is very simple. You have a forest, a small forest.

00:11:47: And you have, in the middle, and then you have a vineyard.

00:11:50: And maybe you have another forest further away.

00:11:52: But insects and small animals have no way to go from one side to the other.

00:11:56: So you create a corridor for that.

00:11:58: So that you use the biodiversity and you develop the biodiversity.

00:12:03: So it's about abandoning herbicides.

00:12:09: Those herbicides, of course, destroy herbs, but destroy also a lot of other living organisms.

00:12:15: And so abandoning herbicides means that of course you have to do manual work.

00:12:20: You have to replace the herbicides, but also down in the past.

00:12:24: If you are very wealthy, you use horses.

00:12:26: And then you get even a manual of the horses to fertilize your vineyard.

00:12:32: And some of the Bordeaux properties do that today.

00:12:35: If you are at a very high-end level, if you are more at a medium level,

00:12:39: and we are with champagne, we would use this mechanization.

00:12:42: We use electric tractors who will turn around the soil rather than using chemical products.

00:12:50: So that's an example.

00:12:51: But we also have eliminated more or less the use of insecticides.

00:12:57: Because insecticides are very useful in agriculture and viticulture to eliminate those insects which bother you,

00:13:07: but they eliminate all the other insects as well.

00:13:10: And so you have to find ways where you get rid of the insects which are hurting your production,

00:13:18: but you are much more targeted.

00:13:20: So there are new systems today which do not use these kind of wide-range chemicals anymore, etc.

00:13:28: So there are a lot of things to be done.

00:13:30: And then we have ridges in the world, for instance, in Argentina, where the biggest problem will be water and the over-consumption of water.

00:13:36: So that's another topic.

00:13:37: So what you do there, of course, you do drip irrigation.

00:13:40: So that we have done for many years already.

00:13:42: So instead of flooding the, you know, in Mendoza, they would flood the fields with water from the ants.

00:13:49: And then a lot of the water would get lost.

00:13:51: If you do drip irrigation, you only use a fraction of the water to have the same results.

00:13:55: But that's not enough.

00:13:57: Now we have systems where you use drones to see which part of your urine needs water and which part maybe doesn't need water.

00:14:05: And you only irrigate the part which needs water.

00:14:08: So you can again diminish the consumption.

00:14:10: So there's always new methods you find to be more effective and contribute to this problematics, solving of this problematics.

00:14:22: And in your time as CEO, you decided that soil and the whole ecosystem is so important that you wanted to create the world living soils for.

00:14:35: Can you talk about a bit that?

00:14:37: Yes. So, I mean, of course, all the decisions are really collective decisions because when I came in, I was not an expert on these topics.

00:14:45: And I'm still not, even though I can talk a good game, when it really comes into detail, I also need the help of the experts to help me really understand what's going on.

00:14:55: I mean, what I think I brought in though as a philosophy is a rigorous focus on science.

00:15:05: You know, in the entire world of sustainability, there's so much, there are a lot of legends, there's a lot of beliefs.

00:15:17: There are a lot of things which are done based on beliefs and not based on science.

00:15:22: Either because science is missing, because we don't have the scientific evidence.

00:15:27: So we are doing things believing that they are better, but we have no proof that it works.

00:15:32: And so I wanted to say to make more time to adopt a rigorously scientific approach to everything we do.

00:15:40: And when we started doing that, we realized how much we were lacking information and data and methods and all that.

00:15:46: And we said, well, we need to get in more experts to help us on that.

00:15:51: And then we realized that they are experts for everything, but they are all around the planet.

00:15:56: They do not nearly always talk to each other. There's a lack of a true place where they come together and where they can exchange on that.

00:16:05: And we needed it for ourselves, but we realized that it was actually generally.

00:16:09: And that's where we created the Living Souls Forum.

00:16:12: The Living Souls Forum was about bringing experts together.

00:16:15: So we had a few hundred participants on the last one.

00:16:19: We brought them together.

00:16:20: We had 500 participants plus 102 satellite events we made in China and in Napa Valley US.

00:16:27: We had more than 160 speakers from all around the world talking about all the different subtopics.

00:16:36: Some of them we already evoked about biodiversity, about water management, etc.

00:16:42: And we also had some startups present who have developed solutions for helping us there.

00:16:49: I mean, there's one which I remember, which we got our golden award from us, which is a colimere, which is 100% biodegradable,

00:17:00: which you can put into the soil and it will fill itself with water when it rains, like a sponge.

00:17:10: And the sponge will progressively give up the water when it gets dry.

00:17:14: So you increase massively the capacity of the soil to retain water.

00:17:19: And then in the end, it's biodegraded and it's fertilized.

00:17:22: So it's actually quite amazing as a solution.

00:17:25: I mean, there will be new technologies which are great to help.

00:17:28: I actually try to actually try to find this product for my own garden.

00:17:33: It doesn't seem to exist yet for small users like we are as individuals.

00:17:42: But you see, so the world living so is about all of that, bringing people together and more tenancy in that world serving schools.

00:17:49: We are not acting as an example of whoever does everything right.

00:17:55: It's sort of a marketing conference for more tenancy.

00:17:58: We are inviting our competitors actually.

00:18:00: We are inviting everybody. We want to hear we are a catalyst.

00:18:03: So as a catalyst, we bring people together.

00:18:05: We are not perfect. Nobody is perfect.

00:18:07: But the more we can exchange and share ideas and solutions, the better we'll all become.

00:18:13: And so that was the whole idea behind this Living Source for all.

00:18:17: And it's a complex undertaking.

00:18:19: We have done the, we have done now with the first embryonic version of this just before COVID.

00:18:26: And then we did the first three or one, three years ago.

00:18:28: And then we plan to do it this year again.

00:18:31: And of course, since business has been more difficult this year, there were questions.

00:18:35: Should we do it? Should we not do it? It's expensive, etc.

00:18:38: And we say, no, we do it because, I mean, climate, climate doesn't stop.

00:18:42: Climate change doesn't stop in a year where, where business is not good.

00:18:46: And the degradation of the stories doesn't stop.

00:18:48: And all that continues.

00:18:50: So it's not a luxury.

00:18:52: It's not something you do where you have a good year.

00:18:54: You have not such a good year, but you do it all the time because it's crucial for the future.

00:18:59: Yeah.

00:19:00: And I remember you were saying in your entrance speech that everybody has seen a lot of cuts in the budget and so on.

00:19:08: But this get together of all the stakeholders is just massively important because we need to find solutions and learn from each other.

00:19:15: Just, just very briefly with one more question going into the forum, because I listened to a few sessions.

00:19:23: One was about systemic challenges.

00:19:26: Then one about ecological corridors, which we talked already about.

00:19:31: And then putting nature on the balance sheet.

00:19:35: So can you help us a bit understand what that means putting nature on the balance sheet?

00:19:42: Well, I would say in the essence, it means trying to get numbers behind what you do.

00:19:48: And that's not easy.

00:19:49: I mean, how do you qualify a soil as being healthy or not healthy?

00:19:54: What, what, what, I mean, how do you get a KPI there?

00:19:57: How do you measure your progress?

00:19:59: So, so it's, so that is really what it, what it means.

00:20:04: You, there are things we can, we can measure.

00:20:06: We can now measure our CO2 footprint.

00:20:09: I mean, took a long time to get there and we, and it's not yet perfect.

00:20:12: But we can measure, we can measure water consumption.

00:20:15: But how do we measure the biodiversity in the soil?

00:20:18: And there, how do we measure, try to measure everything?

00:20:21: So it's, it's the idea that we need to be obsessive with getting a KPI, which will, which will help us to manage measure.

00:20:38: I mean, a KPI can be how many units of energy do we use for the transportation of our products per product?

00:20:46: So we had years ago, we were doing a lot of airshipments, you know, when you had an urgent need for high end champagne somewhere in the world, you would ship it by air.

00:20:54: They will say no airshipment anymore.

00:20:56: So with that, we were able to reduce like the, the units of, of energy per, per kilometer of transport of your, of your, of a bottle of champagne.

00:21:07: So, so get as far as possible into creating KPIs, which you can actually measure and where you can measure your own progress.

00:21:15: That is really what this behind that.

00:21:17: And you mentioned that you had China and the US in the forum.

00:21:25: Do I assume that China and the US have similar problems with their whole soil and the impact of climate change and pollution, etc.

00:21:36: Or is it different from region to region?

00:21:39: Oh, no, no, no, no, no, no, no, no, no, no, no, it's absolutely global.

00:21:42: I mean, climate change is global everywhere in the world.

00:21:44: Harvest earlier and earlier, everywhere in the world, climate disruptions gets bigger and bigger.

00:21:55: We have seen it in US, we have seen it in China.

00:21:57: China has a huge desertification issue around to go be desert and but so have other people.

00:22:05: I mean, it's, it is a general topic throughout the world.

00:22:09: I think the climate impact or the degradation of the climate is a global phenomenon.

00:22:17: The recognition of it is not always global.

00:22:20: There are people recognizing more or less.

00:22:22: I mean, but I, if you talk about China just came from a trip in, in China.

00:22:27: I mean, it's a huge awareness in China that sustainability is key and they have, they have done a lot of things.

00:22:33: I mean, nowhere do you see more electric cars now on the street than China.

00:22:37: They've put a lot of efforts in cities to put in trees to lower the temperature and make, of course, trees, cities nicer.

00:22:48: I mean, there's a lot of efforts there and so, and so it is in many other regions.

00:22:52: So.

00:22:53: And in Napaveli?

00:22:56: Well, in Napaveli, of course.

00:22:58: I mean, Napaveli is a very warm region and they are, they are concerned about climate.

00:23:03: Of course, it is super, super important.

00:23:06: They're excited as well.

00:23:07: They are, they are, they are concerned about the climate and, and hence we had in our property, Joseph Feltz in Napa, we had invited industry players, members, competitors to be part at the distance of the well-living

00:23:25: source forum without having to take the plane from San Francisco to Tunis.

00:23:30: So, so it was that idea.

00:23:33: And I read in one of your reports also the other frightening number of that.

00:23:42: And I'm quoting here in the future if climate change pushes average global temperatures up by two degrees, 56% of the world's wine growing regions could.

00:23:54: Disappear.

00:23:55: And right now we have huge difficulties.

00:23:58: We have Azerbaijan, the summit in Baku and they're talking they probably can't keep the 1.5 degree target.

00:24:07: So two degrees is not very far.

00:24:13: Yeah, yeah, yeah, yeah, yeah, yeah.

00:24:15: What is your, this is a hell of a number, half of the world's wine growing regions.

00:24:20: Yeah.

00:24:21: That has been quoted or evaluated by some institute.

00:24:26: I mean, we are trying to, we're trying to counter that, you know, by there are a lot of things you can do to adapt to climate change.

00:24:37: You can, there's all the things you can do the way you grow the one, you know, you take a region like Champagne.

00:24:43: The past Champagne was the most difficult region to create wines because of the cold climate and the wet climate.

00:24:52: Yeah.

00:24:53: So everything which was done was done to overcome the weakness of the location and to still make wine.

00:25:00: And you know, sometimes they didn't have enough sugar at the end of the harvest.

00:25:04: And so they would add sugar so that they would get a fermentation.

00:25:08: Otherwise they wouldn't get a fermentation.

00:25:10: So today that's all along with the case.

00:25:12: So today we get, we get, we get enough sugar.

00:25:14: We get all the, we get all the, we get all the best conditions to make good wines, but we have to prepare for even warmer weather.

00:25:22: And that means changing some of the practices, the way you cut leaves, the way you orient the wines, sometimes changing also the biological material, going for different plants, maybe different sipage in the future.

00:25:38: So we'll have to adapt to this.

00:25:41: But some regions which are very in the south, like in North Africa or so, which were a big wine producing regions, may at some point of time find the time to warm to, to, to make wine.

00:25:51: So and other regions may find that they become part of the area in which you can grow wines.

00:25:59: So there will be also compensation on that side.

00:26:02: But it sounds for me as an outsider, a bit like a vicious cycle here.

00:26:07: One have the droughts, one have the floods.

00:26:09: There is not, there is not enough water.

00:26:13: You have early springs.

00:26:15: You got the, and I remember going to Röfklickur many years ago, they talked about the April frosts and the danger of it.

00:26:22: You have the ever rising temperatures and so on.

00:26:26: And yeah, I don't know, is, is a, you need a lot of optimism and hope and collaboration.

00:26:37: And is that the case?

00:26:39: Is that what you are doing and what we are doing?

00:26:43: Yeah, look, look, yeah, you're right.

00:26:48: It is frightening.

00:26:49: It is worrying.

00:26:50: And, and, and, you know, you, you, when you read, when you open the newspapers, you, you wonder why we need to have topics like wars in Eastern Europe or the Middle East or, or Africa or why we need other topics, which are so secondary.

00:27:07: And so, how do you say, so counterproductive.

00:27:12: Yeah.

00:27:13: So, how do we all be today obsessed by how do we adapt ourselves?

00:27:19: It's no longer about preventing climate warming.

00:27:23: It's, it's going to happen regardless.

00:27:26: We can minimize its impact of the long term, but we will not prevent it.

00:27:30: We have more energy and time spent on adapting ourselves to that climate change.

00:27:36: I mean, all this money going into needless wars could be spent much better into planting more trees, helping the, the, the, the reduce the desertification, et cetera, et cetera.

00:27:51: But of course that's the, that is the, the dilemma with mankind today and always.

00:27:57: Yeah.

00:27:58: Yeah.

00:27:59: And that is still it.

00:28:01: And we take on another hour to talk about that.

00:28:06: But I wanted to move you briefly back to the sustainability and how your company is embedded in the larger LVM age policies.

00:28:19: I looked up your work and your pioneering work basically in the luxury industry.

00:28:27: And it starts with that.

00:28:29: And I just want to give the listeners here a few numbers.

00:28:33: In 92, LM LVM age creates its first environment department after the Rio de Janeiro Earth Summit.

00:28:44: Six years later, Hennessy becomes the first wine and spirits producer in the world to obtain environmental certification.

00:28:54: In 2003, you joined the United Nations Global Compact.

00:29:00: LVM age sets up already in 2015 with the sustainable development goals of the United Nations and internal carbon fund to finance projects to come and come with climate change.

00:29:13: Now you have the program called Life 360 Environmental Strategy, which sets out targets for 23, 26 and 2030.

00:29:25: So you are actually a pioneer in the luxury industry, which is sounds probably to some people like a contradiction.

00:29:38: So you have done all that and still we are fighting what we just said, the vicious cycle.

00:29:49: Well, first of all, I would question the, I know people see it as a contradiction, but I would already question that because of the following.

00:29:59: I worked for eight years for Louis Vuitton.

00:30:02: Louis Vuitton creates fantastic products.

00:30:04: Of course, there is consumerism behind these products, but they tend to be used far longer than other products because of their high quality.

00:30:14: I think particularly about leather goods.

00:30:16: I mean, if you have a wallet from Louis Vuitton, when you have had wallets before,

00:30:22: realize it lasts far, far longer than the simple or cheaper wallets because of the quality

00:30:29: of the materials and all that.

00:30:30: So there is an element, there is an essence in the world of luxury.

00:30:34: If you think about leather goods, you think about watches, you think about some pieces

00:30:43: of your guard wall, like a nice winter coat or something like that.

00:30:48: I mean, in the luxury industry, it gives you products which you can wear for the entire

00:30:52: life and they can be repaired.

00:30:54: If you have anything which doesn't work with your Louis Vuitton suitcase or bag or whatever,

00:30:59: you can bring it back to Louis Vuitton and it will be repaired.

00:31:01: It will not be thrown away.

00:31:03: And so in that sense, I would say luxury industry has always been part of the genetics of the

00:31:09: luxury industry to create products which have long lives and hence contribute in a way

00:31:15: to less wastage and less carbon footprint actually.

00:31:21: And also a lot of these products are handmade.

00:31:23: I mean, you go to the atelier, you wonder how much hand works they use.

00:31:29: They use less glues and machines than they use stitching by hand.

00:31:34: So that's true for almost all the luxury industries categories.

00:31:41: So that's the thing I would say in general.

00:31:42: I mean, it's not true for every single product, but as a general mixed luxury industry tends

00:31:47: to have rather products which are long lasting, long living and they don't need to be replaced

00:31:51: so often and so makes you more happy longer, but also have much less damage to the environment.

00:31:58: Up to the point that there is a second hand market which is swivey, in which you can sell

00:32:03: the bag or the dress you don't want to wear anymore.

00:32:06: There's a very big second hand market and you can sell it there and somebody else will

00:32:11: buy it and continue wearing it.

00:32:14: And I think that is great.

00:32:15: So that is about the idea that this maybe or there could be contradiction between being

00:32:20: a leader in sustainability and being luxury.

00:32:22: It's not a contradiction.

00:32:23: It's part of what luxury is.

00:32:26: Luxury is the idea to have things which have a high quality and lasts for a long time or

00:32:31: maybe for your entire life.

00:32:35: But Life 3360, the program which we made, created and in which we have our path to play

00:32:42: is of course goes much further than that.

00:32:44: It's about creating products in harmonious nature.

00:32:47: It's about, of course, preserving ecosystems.

00:32:50: I mean, everything I described on wet tendency is partially extended to other areas where

00:32:55: there is also the link to nature.

00:32:58: For instance, in the world of perfumes, when we have all flower fields which we are using

00:33:03: at Dior, the Parfum Christian Dior for the perfumes, we have similar approaches to agriculture

00:33:10: and sustainable agriculture.

00:33:12: And then of course the whole element of engaging our stakeholders, suppliers, customers, innovation,

00:33:18: with innovation and also with traceability, which is very important aspect of all that.

00:33:26: Knowing where your product, your original raw materials and your work is coming from

00:33:31: and making sure everything has been done in the right way.

00:33:34: So all that is part of what luxury is about.

00:33:37: And luxury, of course, we sell expensive products and it should be part of an expensive product

00:33:44: that the company has done the right thing behind that product.

00:33:46: And that's what we believe is critical.

00:33:50: What's your take on the future of the luxury industry altogether?

00:33:57: Well, my take is that the luxury is about different things.

00:34:01: The luxury industry is about these things.

00:34:04: Luxury is about transmitting a craftsmanship to the consumer.

00:34:10: It's about this balance between modernity and tradition, always finding this balance

00:34:15: again.

00:34:18: The tradition being the craftsmanship, the sub-affair, the modernity being the design,

00:34:24: the way your market your product, etc.

00:34:26: But luxury is also about buying products which last.

00:34:33: You buy whether that's a bag from Vittor, whether that's a sweater from La Roppiana,

00:34:40: whether that's a watch from Takoye or a ring from Tiffany.

00:34:44: These are products which you want to keep for a long, long time and you don't need to

00:34:48: buy a new one every year because it's wasted, it has lost its qualities.

00:34:55: So I think luxury is there to stay also because of these qualities and because of the longevity

00:35:03: of the products.

00:35:04: I agree with you.

00:35:06: Still, I want to dig a little deeper because we talked about the future in which we will

00:35:16: have less land and less water.

00:35:22: Is luxury then at the end only for a few?

00:35:27: Well, look, everybody needs to wear a sweater in winter.

00:35:33: Do you rather have a sweater switch after one year?

00:35:35: You have to throw away because the quality wasn't there.

00:35:39: Or you rather have a sweater which you can wear for many years in a row because it's

00:35:43: such a high quality.

00:35:45: Or everybody needs to have a business bag.

00:35:49: You want the business bags which you replace every other year or one which lasts much, much

00:35:53: longer.

00:35:54: So I don't think that luxury on a category base is a bigger consumer of natural resources

00:36:05: than cheaper version of these products.

00:36:09: On the contrary, I think the more craftsmanship you put into a product, the more quality you

00:36:13: put into a product, the longer it will last.

00:36:16: And hence, on a per year of utilization of the product, you will use less natural resources

00:36:22: versus a lesser quality product.

00:36:25: Now, this is what I'm telling you.

00:36:27: I'm not saying I don't have data to make that point, but I think that's a philosophy at

00:36:33: least which I see behind the world of luxury.

00:36:38: Can we focus a bit on the importance of community and transparency?

00:36:44: Because Mohit Hennessy invests a lot in communities and yes, of course, particularly in the wine

00:36:52: growing regions to ensure fair labor practice and sustainable development.

00:37:00: So how important is the region and the society for you?

00:37:07: Let me give you an example.

00:37:08: It is very important because ultimately we talk about our customers as well.

00:37:13: When Henry Ford was creating his cars and saying, "Well, I want to make them at the

00:37:18: price that I get a lot of people who are able to buy them, at least I'm going to, my workers

00:37:22: should be able to buy my cars."

00:37:25: So it's not exactly the same thing, but the idea is that yes, the regions are important.

00:37:29: They are also our customers.

00:37:30: The hotels and restaurants reach the people, work there.

00:37:33: And of course, they are also our customers being our suppliers.

00:37:36: You know, for instance, in Champagne we have about 1,500 or 1,600 hectares of vineyards,

00:37:46: but we use the grapes from about 6,000 hectares of vineyards.

00:37:51: So the balance is purchased for more than 2,000 families, small families, small businesses.

00:37:59: So they are our customers as well in a way because without them, I mean, we provide them

00:38:03: with livelihood by buying their grapes, but they provide us with the raw material with

00:38:07: which we can do our wonderful champagne.

00:38:10: So it's super important that we always think about them as well.

00:38:13: And when we make sure that they can live from what we buy from them, that we also make sure

00:38:20: that we encourage them to adopt more and more sustainable practices.

00:38:25: That's why, for instance, when we buy grapes, we have some special incentive schemes for

00:38:30: respecting certain sustainability practices so that they have financial incentive to abandon

00:38:39: some chemical sweet.

00:38:40: So this is super, super important for the whole thing.

00:38:45: Then we, of course, we use, we have the harvest.

00:38:49: And I'll give you again the example of Champagne.

00:38:51: So we have the harvest in Champagne and we use the harvest.

00:38:55: You bring in a lot of temporary labors to, because it only lasts for three weeks.

00:39:02: So there are people who come every year to Champagne to do the harvest.

00:39:04: They come from France, but they come also from Eastern Europe.

00:39:08: And we have been investing every year into creating new, what we call Vendor joie, which

00:39:13: is basically, we could say is a bit like USO stats, USO source for people who come for

00:39:20: the winters.

00:39:21: So it's the accommodation that we provide them with breakfast, lunch and dinner.

00:39:30: Sometimes we have a little bit of entertainment there as well.

00:39:33: And we've invested in that so that they can come in a distant place and not live in a

00:39:39: tent or whatever and do the work during these three weeks in a distant way.

00:39:45: But then we were thinking, well, that's a bit of a waste, isn't it?

00:39:47: We do have these houses standing there.

00:39:51: They're simple houses, but they're still houses to where we house for three weeks.

00:39:55: The people who come for the harvest.

00:39:59: And when the Ukraine invasion started, a lot of Ukraine refugees came to Western Europe

00:40:05: and we decided to make this Vendor joie available for refugees in Champagne.

00:40:11: So that was a whole project which we involved our teams with, where we, for the exception

00:40:20: of the three weeks during the season of harvest, we made a number of these houses available

00:40:30: for Ukraine refugees, a kind of a transition space before they could go to some more permanent

00:40:35: place.

00:40:36: So this example of trying to see what can you do and sometimes it's actually something

00:40:41: easy you can do if you think about it.

00:40:46: I want to take you back to the business model, combining business with the new challenges.

00:40:58: And you signed up to the Science-Based Targets Initiative and you are at the UN Global Compact.

00:41:08: When you talk us through this transformation, this is not done overnight and you've got

00:41:14: ESG department and so on.

00:41:17: What does it take really to implement those new standards in time and also financially?

00:41:26: Well there is a cost of course in terms of time and financial.

00:41:31: So it takes time of course and you cannot do everything at the same time.

00:41:35: So one difficulty we encountered from the beginning and I explained already early on

00:41:41: and I explained why we created the living source for this was are we sure that what

00:41:45: we do has measurable impacts?

00:41:47: Are we doing the right thing?

00:41:50: Just think about if you have 100,000 euros to invest, is it better to invest in isolating

00:41:59: the building where you have an office building where you have your staff?

00:42:04: Is it better to invest in putting solar cells on the roof of that building or another building?

00:42:10: Is it better to invest them in buying electric vehicles instead of gasoline driven vehicles

00:42:18: for your tractors or whatever?

00:42:22: Where do you get the most bang for your buck in terms of environmental impact?

00:42:27: That is a question I constantly ask and it's one where I'm starting to get answers but

00:42:32: it's difficult to get answers.

00:42:33: I mean just think about your staff as a consumer when you are wondering what you should buy

00:42:37: an electric car, a hybrid car or keep your old diesel car.

00:42:45: What is the best decision in terms of the impact on the environment?

00:42:48: It's not so easy to answer and everybody is scratching his head.

00:42:52: So we have this question multiplied by all the different tools and situations and geographies

00:42:59: and all that.

00:43:00: So the idea that you constantly try to challenge whether if I can spend that much, so if I

00:43:05: can spend 100 million euros a year on all my environmental initiatives including giving

00:43:16: incentives to my viticulture supplies to improve the ways of working, including using biomass

00:43:25: to fire your distilleries, including isolating some of your buildings better and use less

00:43:33: electricity to heat them or oil to heat them, including all the other things we do.

00:43:37: If you have 100 million to do that, where is that 100 million spent the best so that

00:43:43: the overall result you get will be the best possible?

00:43:48: And sometimes people come and they try to improve marginally something which is already

00:43:53: quite good and you say stop.

00:43:56: I rather have you put that money into place where we get more out of it or where we are

00:44:00: further away from or where there is more potential to improve.

00:44:03: So the notion of the return on money invested but not return in terms of savings but return

00:44:10: in terms of impacts on the environment is very important.

00:44:15: But then how do you compare the program where you increase biodiversity to program where

00:44:20: you reduce water consumption to program where you improve your carbon footprint?

00:44:26: Not so easy to say where.

00:44:29: So this of course at some point you find you just have to use your judgment and balance

00:44:32: out but ideally you want to go more and more towards being able to have one currency for

00:44:38: all of that and being able to say here's where I get the biggest bang for my buck.

00:44:45: I remember previous guests were also the CEO of the UN Global Compact and the ISSP chair

00:44:54: and both of them talked about similar things and right now from how I understood it they

00:45:01: are still very open also to help.

00:45:06: They are very open to obstacles that small, medium-sized companies face and big ones.

00:45:15: What would you say are the major obstacles from all the meetings you have with suppliers

00:45:24: and so on?

00:45:27: What comes up most?

00:45:30: The major obstacle is really the sheer complexity of the whole topic.

00:45:38: It's an objective complexity.

00:45:40: I think you find a lot of goodwill everywhere.

00:45:46: The complexity and then of course the cost situation.

00:45:50: The cost situation is also one which is evolving.

00:45:53: Every innovation when you launch any new innovation initially is very expensive and then you find

00:46:00: ways to make it better and simpler and then over time it becomes cheaper and cheaper and

00:46:04: cheaper and that one point of time it becomes perhaps cheaper than what you did before but

00:46:08: with much better environmental impact.

00:46:11: We also have to give time to the learning curve so that we get better and then of course

00:46:16: sharing information.

00:46:18: I mean there are solutions.

00:46:20: People do ask them how do you share it but how do you know that somebody has already

00:46:24: moved much further on the learning curve than yourself and how can you benefit from his

00:46:30: learning curve?

00:46:31: That's again why we did the World Living Source Forum so that we can have people sharing

00:46:36: on their own learning curves and thus accelerating each other's learning curve because in the

00:46:41: end it's about that.

00:46:42: I do not believe that practices in the long term would be much more expensive than once

00:46:47: we had so far but in the transition they are more expensive for sure and the faster we

00:46:53: move up the learning curve the shorter they will be the transition and the farther we

00:46:57: will be able to go.

00:47:00: I mean think about this what I told about this new polymer which is biodegradable you

00:47:07: put in the soil and fill it with water.

00:47:11: This is actually a very cheap solution we had to retain your water.

00:47:16: It might be much cheaper than buying and building water pools to keep the water or whatever

00:47:23: which we usually do.

00:47:24: It might be much cheaper than that and has a lot of other benefits.

00:47:29: So I mean the cost per unit of saving whether it's CO2 or whether it's water whatever is

00:47:36: very very important fact that we don't see that enough when we are being presented products

00:47:42: or ideas or when we are learning we are not that's where we come back to the you know

00:47:47: by training I'm an engineer I like to measure things and we are not measuring sufficiently

00:47:52: yet the impacts of what we do and how we move up this learning curve.

00:47:59: Any idea how to do better?

00:48:01: Well do what we do share with others have exchanges have encouraged the industry to

00:48:08: move on do what you do right now by interviewing me as one person from the industry and maybe

00:48:15: somebody will listen to this and find an idea in what I said and maybe I will listen to

00:48:20: it and solve the other record and find another idea I mean talk about it I mean sharing and

00:48:24: talking and move away from being too ideological on this and be rather more pragmatic in finding

00:48:32: the right solutions.

00:48:36: And because you are a pioneering leader and you mentioned complexity.

00:48:46: complexity is really the issue of our time how do you personally in your position deal

00:48:54: with complexity and is there anything you can share what people what other leaders can

00:49:02: pick up.

00:49:04: I think all the leaders like myself they struggle every day with complexity.

00:49:10: It is what keeps us away at night in every part of what we do and sometimes we are the

00:49:16: source of that complexity because we ask for things to be done we ask for repulse we ask

00:49:21: for procedures to be kept but sometimes it's the sheer nature of what we're dealing with

00:49:28: which creates a complexity sometimes it can be some misguided government actions or which

00:49:34: create norms or rules which create unnecessary or which are unnecessary complex or which

00:49:43: could have been done in a less complex way.

00:49:46: Sometimes people who are looking for a hundred percent solution rather than going with an

00:49:50: 80 or 90 percent solution which is often far less expensive and complex I mean it keeps

00:49:58: us up day and night it's I mean how do you deal with complexity well by being transparent

00:50:03: within your organization about what you want giving your organization vision what are you

00:50:07: trying to achieve how you're achieving it and giving the right the right I would say

00:50:15: incentives because it's not all about money but right missions and objectives which are

00:50:23: consistent between different parts of the organization so that they don't work against

00:50:27: each other but they work together with each other.

00:50:32: And how do you keep your organization together in the time of this massive transformation.

00:50:40: Well I think everything we talked about in the last hour is when you talk about that

00:50:45: to your team I mean it's a very powerful element of motivation to work for us and with us you

00:50:52: know whenever I have I do a lot of town halls I just came from a trip in Asia where I in

00:50:58: every country had a town hall with our local teams and the sustainability question comes

00:51:03: out all the time and especially our young people they want to see that the company they're

00:51:09: working with is doing something and so so I think it's rather the sole topics rather

00:51:15: contributes to bring people together because there is a overriding goal which they can all

00:51:25: accept and be motivated by.

00:51:29: So of course and they can be very critical also we'll look at what you do and what you

00:51:33: say and whether you live to the standards which you set up yourself or not.

00:51:39: So it's very key there that we promise what we can keep and that we keep what we have

00:51:50: promised and that we are transparent and that we have a vision that we humble that we admit

00:51:55: that we are not perfect and far from being perfect but that we move out of the mediocrity

00:52:01: in which you may have been at some point of time to become better and better and that

00:52:07: is part of our day-to-day jobs.

00:52:10: Yeah, yeah and of course also to show some vulnerability and transparency and that anybody

00:52:18: can see there is a leader who knows what he's doing and if he doesn't he will call others

00:52:28: and put give them a seat at the table to solve the problems together and even you're doing

00:52:36: all that nobody can fix all the problems and I looked for example at oh god I worked

00:52:43: my way through the entire LVMH annual report 23 and I saw good things and not so good things

00:52:51: but we need to address them and talk about them like for example I noticed that at your

00:52:59: place the energy consumption you would use by 13% which is massive but at the same time

00:53:08: greenhouse gas emissions went up by 9% and so on so it is never just one road to take

00:53:19: is it?

00:53:20: Yeah and it is super difficult to bring out a wide KPI for instance do you look at the

00:53:29: consumption of energy or the CO2 or greenhouse gases as an absolute number or do you look

00:53:35: at it as a number per unit you produce because if you have been selling more of the products

00:53:43: if you sell 10% more but you increase your greenhouses by 5% then you could say it's

00:53:49: not good that you increase by 5% but it's good that you reduce actually by 5% per unit

00:53:54: produced or if you acquire a company you acquire the sales of that company but you also acquire

00:54:01: the greenhouse gas production you acquire the energy consumption so this is what makes

00:54:09: it so difficult that we of course this can all be very good excuses why we are not progressing

00:54:16: well because although but this is always a reason why it is bad because we did this, we

00:54:21: did that so it can be an excuse but sometimes it's really difficult because the structure

00:54:26: of your business changes and then so internally you have to find ways where for given units

00:54:34: where it is kind of a like for like comparison where it is for given unit I want to be better

00:54:38: than before you know in states terms you talk often about like for like terms you know when

00:54:43: you have a network of boutiques and you say all the states went up the X% last year but

00:54:51: on the like for like basis actually went down by 3% because I added that many more stores

00:54:56: so they brought more sales but the stores on the like for like basis did not go up the

00:55:01: sales went down so you always try to look at like for like to understand your performance

00:55:05: what is a bit similar in the environment last year is that you have to look at like for like

00:55:10: data to really measure whether you are getting more performance your performance is improving

00:55:17: or whether maybe it's not improving having said that we tend to give ourselves objectives

00:55:23: which are not on the like for like base which are more on total base and then sometimes

00:55:28: we struggle because there was kind of two ambitious given that the structure of the

00:55:33: business is evolved.

00:55:35: Yeah, yeah, that's yeah, that's that's very important.

00:55:41: I can ask you two more questions before we go to the end because I know your time is

00:55:46: very valuable and you need to go but just two more questions.

00:55:50: One would be really just focus on your industry.

00:55:54: What do you envision as more of Hennessy's long term legacy within LVMH and the wider

00:56:01: industry?

00:56:02: Can you give us an outlook?

00:56:05: The key thing in luxury is that you are the transmitter of tradition from the past to

00:56:10: the future and that is that is very very important because it's it's part of of living in a healthy

00:56:17: world is also we keep our traditions and we use them further.

00:56:21: So whether that's wine making whether that's leather goods making whether that's perfumes

00:56:26: and all that and in order to keep these traditions we use natural resources and if our legacy

00:56:32: can be that we get better and better and using these natural resources to create wonderful

00:56:37: products which bring happiness to people which bring joy but we should also bring them products

00:56:44: which they can use for a long time and they don't need to replace them regularly and buy

00:56:48: more and more and throw things away then I think we as luxury industry leave a good

00:56:54: good legacy to the world both in bringing happiness and joy in doing it with a reasonable

00:57:01: usage or an ever diminishing use of natural resources and still bridging the past and

00:57:09: the future and giving the people the consumer the reassurance that he's wearing or using

00:57:15: something which was done in a way which carries in itself a few hundred years of tradition.

00:57:21: I mean we talk about wine is like a few thousand years of tradition but I think that is the

00:57:25: legacy we as an industry give and then when you get individual brands I always say to

00:57:31: my team you know I'm about to move on in my own professional life I'm going to move to

00:57:40: non-executive roles so I'm going to hand over my role at Moitennacy to my successor at the

00:57:46: end of January and then I will move to non-executive roles I want to get into this new phase of

00:57:53: my career and then of course people say well but this is where you're living and you are

00:57:57: in port and all that and you say well you know our brands are eternal we want people

00:58:05: to still be drinking no pairing in 100 years from now in 200 years from now they're internal

00:58:10: they've been existing for 200 years they will continue to exist for 200 years they will

00:58:14: work differently they will be better at a lot of things they will solve progress to the

00:58:18: lot of the topics which we have addressed but not entirely solved but the important

00:58:23: is that in the life of these brands we the leaders we are ephemeral nobody will remember

00:58:29: us in 200 years or 100 years but we'll have contributed to the eternity of the brands

00:58:36: and the eternity of the brands is also linked to sustainability it's also linked to being

00:58:41: a good contributor to the planet it's also linked to adding to the planet our plan to

00:58:46: be more sustainable and to bring a curve into this curve of destruction of the size of

00:58:55: destruction of the atmosphere of destruction of the climate that we kind of get this contribute

00:59:03: to this being progressively resolved so that in the longer term while people cannot only

00:59:10: drink don't pay no but they can also enjoy a nice climate and they can also enjoy great

00:59:17: salt to produce great food for them and and and that's that's what I think we are we are

00:59:21: there to do I think this is a wonderful way to end this great conversation and contributing

00:59:32: to eternity is especially I like that so I'm sorry to hear that you leave that place but

00:59:40: I'm glad that I had the chance to talk to you very very happy about that thank you very

00:59:47: much for really a wonderful conversation it is important to actually get this complexity

00:59:54: of the luxury industry and to understand the purpose and yeah and I think you delivered

01:00:01: on all of it and I can only say thank you very much and I wish you all the best for

01:00:07: the future and lots and lots of success thank you see be there nice to talk to you bye you've

01:00:14: been listening to a special English edition of the Gorsa Neustadt a German podcast series

01:00:20: by is a bill abad in which she talks to pioneering leaders who are committed to making our world

01:00:27: smarter greener and fairer for more information please visit www W's a bill abad dot com and

01:00:35: the official site of the world economic forum

01:00:39: [MUSIC]