Spain-based Freixenet to potentially lay off up to 180 employees, representing approximately 24% of its workforce.

No Holding Back: Freixenet's Tough Move to Cut 24% of Spanish Workforce

Freixenet, the popular cava giant, has thrown a punch that's left their Spanish employees reeling. The company announced an Employment Regulation File (ERE), potentially shedding up to 180 jobs - that's a whopping 24% of their total workforce! But why the huge shake-up?

Freixenet's justification for the downsizing is as clear as a glass of bubbly: to restructure their production operations. According to a press release, the cava industry has faced an unparalleled crisis due to the ongoing drought, which has hammered the sector and Freixenet in particular.

"Cava production has nose-dived across the board, and we're no exception," Freixenet declared. The company added that reduced reserves and skyrocketing raw material costs have made the gap between market demand and operational sustainability even wider.

It's worth noting that this ERE comes after last year's temporary employment regulation (ERTE). Freixenet initially requested an ERTE for 615 people, citing a crisis due to the drought. However, the regional government didn't find the justification convincing. So, they tried again with another ERTE, which was active until December 31, 2024. But now, they've opted for an ERE.

"This bold move represents a crucial step towards the long-term sustainability of Freixenet," they asserted in the press release, emphasizing their determination to overcome this challenge and emerge stronger.

The Hard Truth about Drought and Cavas

Freixenet warned that extreme weather patterns and the aftermath of several years of drought in Catalonia have created chaos in the industry, plunging the cava sector into a crisis that's never been seen before. This workforce reduction, the company explained, is a response to "a fundamental shift in market dynamics" and a bid to "ensure the sustainable development of the business in the future."

The company admits that it needs to "adjust production levels and align operations with market reality." Adding that it's taking all this painfully seriously, saying they're tackling this process with "full awareness of the emotional impact on employees and their families," and aiming to manage the changes "in the most sensitive manner possible, prioritizing support for those affected."

Reacting to the news, Unai Sordo, the CC.OO. Secretary General, sent out a message of solidarity to the affected workers, expressing concern for those suffering despite the country's generally positive employment and activity status.

Drought's Harsh Blow to Cava Producers

While Freixenet has yet to unveil their 2024 accounts, last month, the Denomination of Origin Cava, which groups major cava producers, announced a 13.4% decrease in cava sales for 2024, although a price hike meant turnover fell by only 4.2%.

Sales in Spain decreased by 3.56%, but abroad, they plummeted by 18%, largely due to the drought's impact on cava stocks. The trade crisis's long-term effects on the sector still remain to be seen, but the drought has undeniably taken its toll, especially on foreign markets. For instance, in Germany - a key market - cava producers could only sell around 11 million bottles, a massive 19.9 million fewer than previously.

And Catalonia? It's been dealing with a state of emergency due to an unprecedented drought in Barcelona and Girona, with local residents stating they've "never faced a drought this long." Sounds like a recipe for trouble in the cava world, huh? Cheers to that! 🍾🥂

The severe drought in Catalonia has led to a crisis in the cava industry, making it necessary for companies like Freixenet to adjust production levels and align operations with market reality.
In an effort to ensure the sustainable development of the business, Freixenet has made a tough move to cut 24% of their workforce, citing organizational changes and the impact of the ongoing drought on their operations.
As a response to the fundamental shift in market dynamics, fewer sports events and celebrations, traditionally significant cava consumers, have resulted in fewer sales for cava producers like Freixenet, causing drought-related challenges for the organization in Catalonia.