In a year marked by extreme weather and shifting consumer preferences, Henkell Freixenet, one of the world’s largest sparkling wine producers, has found itself navigating turbulent terrain.
The German-Spanish giant, known globally for its Freixenet Cava and Mionetto Prosecco, has been directly impacted by the severe drought affecting the Cava-producing Penedès region in Catalonia, Spain.
While several wine companies have managed to weather the storm without major disruption, Henkell Freixenet—alongside Moët Hennessy—has announced staff reductions and a significant shift in strategy to offset the effects of both climate-induced production issues and evolving market dynamics.
A Complex Picture: Modest Growth, Rising Costs
In 2024, Henkell Freixenet reported EUR 1.25 billion in revenue, a 1.5% year-on-year increase. However, this modest growth lags behind the Eurozone’s inflation rate of 2.3%, signaling a drop in real earnings. CEO Andreas Brokemper emphasized the challenges posed by both volatile harvests and changing consumer habits. While Cava sales declined, the group saw strong growth in other segments—most notably, a 15.7% increase in revenue from Mionetto Prosecco and continued momentum in non-alcoholic sparkling wines.
Despite their smaller market share, non-alcoholic options are viewed as a key growth area for the group in future years, aligning with global wellness trends and the demand for moderate drinking alternatives.
Strategic Shifts: Freixenet Brand Goes Global and Flexible
The drought in Penedès reduced grape production by nearly 30%, creating a severe supply-demand imbalance. As a result, Henkell Freixenet made the bold decision to suspend the sale of Freixenet-branded Cava in Germany, Austria, and Switzerland—its core markets—and replace it with sparkling wines produced outside the region.
This marks the beginning of a broader repositioning, with Freixenet evolving into a multi-origin umbrella brand, encompassing Prosecco, French sparkling wines, and non-alcoholic variants. While controversial, this pivot is designed to ensure supply continuity and meet market expectations, especially in price-sensitive regions.
Regional Performance: A Mixed Global Landscape
The company’s financial performance varied by region:
- Germany, Austria, Switzerland: Sales fell by 1.7%, largely due to the Cava suspension.
- Eastern Europe: Sales rose 5.6%, with Poland posting 15% growth.
- Western Europe: Modest 0.8% growth, buoyed by Prosecco success in France and Northern Europe, and Freixenet’s steady presence in the UK.
- Americas: Solid 7% increase, thanks to growth in the United States and Brazil.
- Asia-Pacific: Declined 1.8%, despite strong double-digit gains in Australia.
Workforce Impacts and Industry Implications
The climate and market challenges have prompted a wave of restructuring. In Spain, Freixenet filed an ERE (Redundancy Plan) affecting 180 employees, nearly 30% of its national workforce. The company attributes this to drought-driven production losses, although union sources believe it reflects a deeper shift in business strategy, particularly the move away from traditional Cava dominance.
This follows a rejected ERTE (Temporary Layoff Plan) request for 615 employees in 2023, initially filed due to force majeure, which the Catalan government denied.
Meanwhile, Moët Hennessy, the luxury wines and spirits arm of LVMH, has also announced a 10% workforce reduction, citing declining consumption among younger consumers. However, this reduction will occur passively—through non-renewal of retirements and unfilled vacancies—as part of a longer-term adjustment.
Looking Ahead: Pressures Mount, Strategies Adapt
As 2025 approaches, Brokemper warns of continued harvest volatility and geopolitical uncertainty. Despite Catalonia lifting its drought alert, the damage to vineyards is not yet fully understood. With grape availability strained and raw material prices high, producers are under immense pressure to evolve.
Diversification remains key. With a strong portfolio including Henkell, Freixenet, and Mionetto, the group aims to innovate, expand globally, and invest in alternative sparkling wine categories.
The case of Henkell Freixenet highlights a broader truth for the wine industry in 2024: climate change and shifting consumer values are no longer future concerns—they are today’s reality. How producers adapt will shape not only their survival but the future of global wine.
Source: Vinetur