Louis Vuitton's $1.5M Tea Chain Win May Have Cost It Millions More

By Grace Kim

Louis Vuitton won a $1.5 million trademark judgment against Chinese milk tea chain Molly Tea in June — and the backlash may have cost the brand a meaningful slice of Chinese sales.

LVMH's fashion and leather goods division, which houses Louis Vuitton, posted €8.25 billion in third-quarter revenue, down from €8.50 billion a year earlier, according to the company's earnings report. Strip out currency swings and acquisitions, and organic sales fell 5% as Chinese shoppers pulled back. Luca Solca, managing director of luxury goods at Bernstein, told Fortune the Molly Tea controversy accounted for 2 to 3 percentage points of that drop.

"Without it, for the avoidance of doubt, we could have had -2-3% instead of -5%," Solca said.

LVMH was more careful. On the Oct. 12 earnings call, CFO Cecile Cabanis said it's "very difficult to size" Molly Tea's impact, but added it's "probably fair to say that it had a negative impact at least at the beginning of the quarter."

A $1.5 million win that cost millions in revenue — that's the math Bernstein is putting on the table.

How did a flower spark a backlash?

Louis Vuitton sued Molly Tea in May 2025, four years after the milk tea company was founded, claiming its four-petaled logo infringed seven registered trademarks. On June 29, a Chinese court sided with the French luxury house and ordered Molly Tea to stop using the design and pay 10.3 million yuan ($1.5 million) in damages. Founder Zhang Bocheng said he will appeal.

The ruling struck a nerve. State-owned newspaper Beijing Daily questioned why Molly Tea had to pay over a floral design rooted in Chinese aesthetics. Chinese social media piled on:

• The hashtag "LV Accused of Monopolizing Ancient Chinese Patterns" cracked Weibo's top 10 trending topics, per the Global Times.
• Another topic on the 10.3 million yuan judgment drew more than 360 million views, according to China Daily.
• A discussion about Molly Tea's invalidated trademark drew 18.7 million views.

LVMH and Molly Tea did not respond to Fortune's requests for comment.

The takeaway: in China, a legal win over a beloved local brand can turn into a reputational loss overnight.

How bad is China for LVMH right now?

Bad, and getting worse — even without Molly Tea. LVMH's Asia excluding Japan segment, which accounts for 27% of group revenue, swung from 4% organic growth in the second quarter to a 5% decline in the third, per the earnings report. The U.S., by contrast, grew 5% in the quarter.

Spending by Chinese customers on LVMH's fashion and leather goods brands fell by a percentage in the mid-teens year over year in the third quarter, Cabanis said. Chinese shoppers cut spending by "double digits" at home and by a "mid-single-digit" percentage abroad. That drove the division's 5% global organic sales drop, which followed 1% growth in the second quarter.

"The deceleration is obviously largely driven by the Chinese clientele," Cabanis said.

In an Oct. 13 research note, Morningstar analyst Jelena Sokolova called Chinese demand "the main drag" on the division and wrote that the Molly Tea controversy may have contributed.

The numbers tell one story; LVMH's investment plans tell another.

Is LVMH retreating from China?

No — at least not officially. The company has rejected any suggestion that the trademark dispute is pushing it out of the market.

"We are not stopping investing because there was the Molly Tea topic," Cabanis said on the call.

With Chinese demand already sliding before the lawsuit made headlines, LVMH's bet is that a viral hashtag fades faster than a weakening luxury market deepens. The third-quarter numbers suggest that's the harder fight.