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Cava shortage fears grow as drought prompts Freixenet to furlough staff

Published on The Grocer

 

Spanish-German cava producer Henkell Freixenet plans to furlough 80% of its workers in Catalonia as the region grapples with a severe drought that has hit grape production for the past three years.

In a statement released this week, Freixenet said it would temporarily lay off as many as 615 of its 778 employees in Catalonia from next month.

“The measure, which has been implemented in the interests of responsibility, aims to guarantee the operation of the business and to maintain employability in order to deal with external factors and the force majeure caused by the serious drought,” Friexenet said.

The winemaker, which is the region’s biggest cava producer, added: “The furlough, caused by force majeure, is an exceptional measure that has been taken in the current context of a crisis that had been brought about by a lack of raw materials because of the harsh drought that has affected the sector since 2021 – and which hit the Penedès [region] particularly hard in 2023.”

Three years of below average rainfall and record temperatures in Catalonia culminated in the local government declaring a state of emergency in February.

Yields in the Cava DO appellation, meanwhile, have fallen from highs of 320 million kilos of grapes to 213 million kilos last year.

Josep Palau, Friexenet’s production director, said in February the ongoing drought would have “a massive impact on all markets in the world”.

The producer last month announced it would launch ‘Freixenet Premium Sparkling Wine – Cuvée de España’ – a declassified sparkling wine in Germany, Switzerland, and Austria from August, because there were not enough DO Cava grapes to meet demand for the drink.

Cava has become increasingly popular in the UK, with a record 16.8 million bottles of the drink sold in 2023, according to figures from the Regulatory Council. Worldwide sales, meanwhile, hit 252 million bottles.

One industry source told The Grocer cava shortages would “push up the price, certainly for next year – if there aren’t adequate stocks to pull from – and for years to come if droughts continue to be an issue in the region”.

“Once we are out of this current crisis in the region, prices are unlikely to return to the levels they have been at in previous years,” they added.

The layoff proposals come despite Henkell Friexenet sales continuing to climb. Last week, the winemaker reported a 4.1% increase in net revenue, to €1.23bn (£1.05bn). Sparkling wine sales at the Wiesbaden-headquartered company, meanwhile, grew by 8%.

“Despite the climatic challenges, we are ensuring our ability to deliver and manage demand of our Cavas to the UK market,” a spokeswoman for Henkell Friexenet told The Grocer.

Prices of Friexenet cava across the big four mults, meanwhile, have remained broadly flat in the past year, according to Assosia data.

 

Published on The Grocer, 25th April 2024

https://www.thegrocer.co.uk/alcohol/cava-shortage-fears-grow-as-drought-prompts-freixenet-to-furlough-staff/690671.article