Dr Andreas Brokemper, CEO of Henkell Freixenet.

While Henkell Freixenet is pleased to report almost 30% growth of its sparkling wine/wine and spirits division to just over €1bn/$1.17bn in 2019, the news is overshadowed by uncertainty in 2020, due to Covid-19 and the impact it will have to the company’s gastronomy and duty free businesses in particular.

According to Henkell Freixenet, after a successful integration of the two entities last year, it is now the market leader for sparkling wine in 35 countries and the international market leader in Prosecco and Cava.

The Rest of the World region, which comprises Japan, Australia as well as remaining parts of the classic export business including duty free, achieved sales of €54.6m/$61m (+92.3 %) in 2019.

Japan, the largest single market, benefited from the elimination of import duties and achieved double-digit growth. In Australia, both Henkell and Freixenet recorded volume growth. Business in China developed positively as well, above all with the classical German spirit drink Kuemmerling.

Source: IWSR drinks market analysis; London; 1-12/2019; effective 21 May 2020.

However, the company’s outlook has to largely ignore past performance as Covid-19 cases grew rapidly in Q1 2020 and travel restrictions were implemented.

CELEBRATIONS TEMPORARILY HALTED

“As early as mid-February, comprehensive measures were decided upon to safeguard the health of employees and production at the sites,” said Henkell Freixenet in a company statement.

“As sparkling wine consumption requires conviviality and occasion in almost all countries of the world, the pandemic has already had a significant impact on sales in almost all countries.”

IWSR expects global demand to fall by -15 % in 2020. Italy, Spain and France are particularly affected, as fierce contact restrictions have led to a slump in sparkling wine consumption in the gastronomy business.

“A forecast for the entire year is hardly possible,” said Dr Andreas Brokemper, CEO of Henkell Freixenet.

“The business development depends largely on the further course of the pandemic and the economic and financial consequences for the markets.

“We expect a significant impact on sales, especially in the gastronomy and duty free segment, and have therefore taken early action to compensate for lost sales.

“Due to the strong country and brand diversification, we are confident that we will master the crisis well and emerge from it stronger.”

“As sparkling wine consumption requires conviviality and occasion in almost all countries of the world, the pandemic has already had a significant impact on sales in almost all countries,” said Henkell Freixenet in a company statement.