Drought latest in Spain: Wine giant Freixenet to furlough 615 workers due to lack of water in Catalunya

THE Freixenet Group, which is one of Spain’s biggest wine producers, announced on Monday that it is going to temporarily lay off more than 600 workers due to the effects of the ongoing drought in the northeastern Catalunya region. 

The lack of rain is having a serious effect on the grape harvest, which in turn is causing problems for the production of Freixenet’s star product, cava – Spain’s version of champagne. 

The company is going to make use of a temporary layoff scheme known in Spain as an Erte, which would see workers sent home on furlough but enjoying state benefits. 

The Erte will come into force in May, according to the company, which added that it has already begun the administrative process with the Catalan regional government and unions.

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It will affect 615 workers, which is nearly 80% of its workforce, according to news agency Reuters. 

“The measure […] is aimed at guaranteeing the viability of the business and preserving employability in order to face external causes and force majeure caused by the severe drought,” Freixenet said.

The statement added that the measure was an exceptional one, caused by force majeure, and within the context of a lack of water that began back in 2021 but that has had a particularly problematic effect in the last year in the Penedes wine-making region. 

The move comes, however, after the company announced strong results for 2023 just a week ago. 

According to figures cited by radio network Cadena SER, the group saw a turnover of €1.23 billion last year, which was up 4% compared to 2022. 

Its sparkling wines saw sales rise by 6% according to the company figures, while its spirit drinks sold 11% more. Its regular wines, however, saw a fall of 8%.

“Seeing that world demand for cava is growing and that we cannot produce enough bottles to satisfy it adequately in the short term, the situation is looking very complicated on all levels,” said Pedro Ferrer, co-CEO of the Freixenet Group.

The Catalan branch of one of Spain’s main labour unions, CCOO, called on the company to scrap its plans for an Erte. 

CCOO said on Tuesday that it had been ‘denouncing the situation that the sector is facing’ for months now, according to news agency Europa Press, and that all of the players in the sector should work to ‘make the regulatory rules for the production of cava more flexible’. 

This could, for example, involve the government loosening the rules covering the production of cava, such as allowing grapes to be used from outside the producing regions. 

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