Drought crisis impacts Freixenet production

The Barcelona-based wine producer, Freixenet faces a dire challenge and temporary layoffs as drought conditions persist.

Freixenet, one of the most famous names in the cava sector, has announced a temporary employment regulation file (ERTE) affecting 615 workers effective from May 1.

The decision, driven by severe drought conditions, was announced by the company, now under the joint ownership of the German group Henkell and the Ferrer family.

The reduction in workforce reflects the company’s strategic adjustment to a projected 30 per cent drop in production capacity due to persistent water shortages in Spain’s El Penedes region. In 2023 there were 80 million bottles less for this same reason.

Impact on production and revenue

The company, which saw a revenue of €1.2 billion in 2023, marking a 4.1 per cent increase from the previous year, anticipates further financial turbulence.

According to El Economista, Pedro Ferrer, co-CEO of Freixenet, expressed concerns about the ongoing drought affecting the region since 2021, with 2023 being particularly harsh.

‘The uncertainty caused by the lack of material grape derived from the severe drought has been affecting us since 2021 and with special impact in 2023 in the El Penedes area,’ Ferrer noted.

Industry response to drought challenges

To mitigate the impact of the drought, the DO Cava has taken proactive measures by establishing a fund to provide base wine as a reserve for future poor harvests, a strategy similar to those in other well-known wine regions like Rioja and Champagne.

This measure aims to buffer the anticipated shortages and sustain the industry’s resilience against climate-induced challenges.

In summary, Freixenet’s decision to implement the ERTE is a reflection of broader environmental and economic challenges that the wine industry faces.

With ongoing negotiations with the Generalitat’s Department of Business and dialogue with unions, the company hopes to navigate through these testing times while maintaining its foothold in the global cava market.