A look at the communications and reputation management rationale behind the major champagne deal confirms it as smart business for both parties:
Today the news broke that French luxury giant LVMH has purchased 50% of Jay Z’s Armand de Brignac ‘Ace of Spades’ champagne. The deal has generated global business news headlines and has been applauded as shrewd negotiation on both sides by the vast majority of commentators. A communications and reputation perspective of the deal confirms this consensus.
LVMH are really buying cultural capital. Jay Z is arguably one of the most culturally significant figures of the 21st century so far; he has broken several ceilings for black musical artists and entrepreneurs, his love of champagne has long been a symbol of his pursuit of refinement and success, and his desire to enter social territory that many of his peers did not feel they had permission to access (a view many of the champagne industry’s old heads, often with racist undertones, shared openly). Put simply; he said to the rap community, and black Americans in general, that they had as much right to drink high end champagne as anyone else.
That’s not a message LVMH has ever been empowered to deliver, and many other heritage champagne brands have explicitly done the opposite, creating an image problem for their industry among several demographics whose increasing spending power has forced even the crustiest aristocrats to accept them as part of the customer base.
LVMH knows the world has changed, and has sought this younger and more diverse audience for some time now. Their partnership with Rihanna to launch fashion house Fenty was rightly seen as groundbreaking, but bad luck and some hints of a flawed business model saw the project shut down earlier this month after 2 years. This latest venture is less of a risk. Armand de Brignac outdates Jay Z’s ownership by centuries and was already a respected product when he took over in 2014, only now it comes with an immensely influential figurehead in the bargain.
For Jay Z it’s all about his evolving brand. His reign as the world’s pre-eminent rapper is not indefinite and increasingly in recent years he has been positioning himself as an entrepreneur as much as a musician. The profile he appears to be chasing nowadays is that of a knowledgeable, industrious and sound-minded CEO, respected in boardrooms worldwide. The vindication of his commercial decision-making by one of the giants of the industries he aims to conquer only serves to bolster the brand of Jay Z the business magnate.