Henkell Freixenet faces layoffs and strategic shift as drought and changing tastes hit cava production

Henkell Freixenet, a major player in the global sparkling wine industry, is facing significant challenges due to the ongoing drought affecting the Cava Denomination of Origin (D.O. Cava) in Spain. While some companies in the sector have managed to weather the crisis without drastic measures, Henkell Freixenet and French group Moët Hennessy have both announced workforce reductions. The German conglomerate, headquartered in Wiesbaden and with a strong presence in Spain, reported that changing consumer habits and volatile grape harvests are already impacting its financial results.

In 2024, Henkell Freixenet’s revenue rose by just 1.5% to €1.25 billion, a growth rate below the Eurozone inflation rate of around 2.3%. The company, which is half-owned by the Oetker family and half by Spain’s Ferrer family, said it managed to maintain its market position despite a challenging environment. CEO Andreas Brokemper highlighted tense market conditions for the industry, noting that while overall market demand fell, certain categories like prosecco, non-alcoholic sparkling wines, and aperitif wines performed well. Mionetto, the group’s prosecco brand, saw sales increase by 15.7%. Brokemper pointed out that non-alcoholic beverages still represent a small share of the market but offer significant potential for growth.

The modest overall sales increase was largely attributed to difficulties at Freixenet, especially as the drought in Spain’s Penedès region has severely impacted cava production. The company estimates that climate change has reduced production by about 30%, leading to higher raw material costs and an imbalance between supply and demand. As a result, Henkell Freixenet decided to stop selling cava under the Freixenet brand in Germany, Austria, and Switzerland. Instead, it now offers sparkling wine from outside the cava region under the same label to meet high demand in those markets. This marks a strategic shift for the company as it moves toward positioning Freixenet as a master brand encompassing cava, prosecco, French wines, and non-alcoholic options.

Sales performance varied by region. The DACH area—Germany, Austria, and Switzerland—saw sales drop by 1.7%, mainly due to the temporary halt in Freixenet cava sales. This region remains the company’s largest market. In contrast, Eastern Europe grew by 5.6%, with Poland up 15%. Western Europe saw only a slight increase of 0.8%, thanks to strong prosecco sales in France and Northern Europe and steady performance for Freixenet in the UK—a market also hit hard by the cava crisis. Outside Europe, revenues rose 7% in the Americas as Henkell Freixenet gained market share in both the United States and Brazil. In Asia-Pacific, revenue fell by 1.8% despite double-digit growth in Australia.

Looking ahead to 2025, Brokemper expects continued geopolitical tensions and high volatility in grape harvests—especially shortages of cava grapes—to persist. This outlook comes even as drought alerts have ended in Catalonia; however, there is still uncertainty about how much damage local vineyards have suffered from water shortages.

In response to these pressures, Freixenet—half-owned by the Ferrer family—has initiated a redundancy plan affecting 180 employees or about 30% of its Spanish workforce. The company cited drought as a key reason for this move. However, union sources argue that the layoffs are more closely linked to changes in business strategy as Freixenet expands its brand umbrella to include other sparkling wines beyond cava.

Last year, Freixenet announced a temporary layoff plan for 615 employees due to a 30% drop in production caused by drought conditions. The Catalan government rejected this plan on grounds that lack of rain was not an unforeseen event. The company then submitted another layoff plan citing economic reasons.

Moët Hennessy has also announced plans to reduce its workforce by 10%, attributing this decision to declining alcohol consumption among younger generations. Unlike Henkell Freixenet’s approach, Moët Hennessy intends to achieve this reduction through natural attrition rather than forced layoffs.

The situation at Henkell Freixenet highlights how climate change and shifting consumer preferences are reshaping traditional wine regions and forcing even industry leaders to adapt their strategies and operations amid ongoing uncertainty.