News — Champagne

Jay-Z is probably the busiest Black entrepreneur in the market, making one deal after another. He recently sold half of his champagne brand, Armand de Brignac, to LVMH, the luxury goods company and also launched a marijuana brand.

The rapper is back in the news after selling a majority ownership stake in Tidal audio and video music streaming service to Square, a digital payment platform run by Jack Dorsey.

Square will pay a mix of cash and stock in the value of $297 million and Tidal’s superstar shareholders, including Beyoncé, Madonna and Rihanna will remain in place, making them the second-largest co-owners. Jay-Z will join Square’s board of directors.

“Why would a music streaming company and a financial services company join forces?!,” Dorsey posted on Twitter, confirming the deal. “It comes down to a simple idea: finding new ways for artists to support their work. New ideas are found at intersections, and we believe there is a compelling one between music and the economy. I knew TIDAL was something special as soon as I experienced it, and it will continue to be the best home for music, musicians, and culture.” 

In a thread, the Twitter CEO further explained: “Given what Square has been able to do for sellers of all sizes and individuals through Cash App, we believe we can now work for artists to see the same success for them, and us. We’re going to start small and focus on the most critical needs of artists and growing their fanbases.”

On his part, Jay-Z said TIDAL remains “a platform that supports artists at every point in their careers. Artists deserve better tools to assist them in their creative journey. Jack and I have had many discussions about TIDAL’s endless possibilities that have made me even more inspired about its future. This shared vision makes me even more excited to join the Square board. This partnership will be a game-changer for many. I look forward to all this new chapter has to offer!”

Jay-Z first acquired Tidal for $56 million in 2015 but the platform has since struggled to keep up with other music streaming services like Spotify and Apple Music. In 2017, Jay-Z announced that he was selling a stake in Tidal to Sprint, a telecoms company.

The $200 investment from Sprint was not enough to keep Tidal afloat as it still struggles to rival Spotify, Apple Music and Amazon Music. According to Forbes, the streaming service’s financial woes have been going on for years. In 2014, it lost $10.4 million, $28 million in 2015 and then nearly $44 million in 2016.

Jay-Z has sold half of his Champagne brand Armand de Brignac to Moët Hennessy, the luxury wines and spirits division of luxury giant LVMH. The acquisition was through a partnership with the rap legend which is anchored on equal stake and a global distribution agreement.

“The 50%-50% structure is an essential element of this alliance and ensures that each of the two partners wants to bring its strengths and expertise,” Moet Hennessy announced in a statement.

According to CNN, the deal comes at a time when LVMH, which owns Moët Hennessy, is working to reach out to diverse customers in the wake of racial criticism against top industry players. In the statement, Moët Hennessy said Armand de Brignac appeals to a global and diverse luxury consumer.

The deal also comes at a time when the coronavirus pandemic has affected the sale of Champagnes due to reduced parties and events across the world. According to CNN, Champagne shipment fell 18% in 2020 compared to 2019. And according to CNBC, this translates into some $1.2 billion of revenue loss.

Armand de Brignac, sometimes referred to as “Ace of Spades”, is popular in North America, Asia, and Europe, with over 500 000 bottles sold in 2019.

“Today, we are incredibly proud to be partnering with them and believe that the combination of our Champagne experience and international network coupled with Shawn JAY-Z Carter’s vision, the strength of the Armand de Brignac brand and quality of its range of prestige cuvées will allow us to take the business to new heights across the world,” said Philippe Schaus, President & CEO of Moët Hennessy.

Neither side disclosed the amount involved in the deal, but Jay-Z intimated on a rap verse on What’s Free by Meek Mill that Armand de Brignac was valued in 2018 at $250 million.

“It is a partnership that has felt familiar the entire time. We are confident that the sheer power of the Moët Hennessy global distribution framework, its unparalleled portfolio strength and its long-established track record of excellence in developing luxury brands will give Armand de Brignac the commercial power it needs to grow and flourish even further,” Jay-Z said.

The rapper revealed in an interview with CNBC that the deal was started in 2019 when he hosted a lunch at his house for Bernard Arnault, LVMH’s founder and chairman, and Alexandre Arnault. “It just started out in a place of respect and built from there pretty quickly,” he said.

Jay-Z’s first connection with a Champagne brand was Cristal in 2016. He fell out with the company after its CEO made some racial remarks in an interview with The Economist. That same year, he bought 50% stake in Armand de Brignac with a partner. He later acquired the remaining stake.