Prosecco boom hits Freixenet sales

Cava producer Freixenet UK has seen sales continue to slide in the last year, as the Prosecco boom and the change in UK’s retail landscape continues to bite.

Freixenet launched its new cava, Ice, in April (Photo: Freixenet)

Turnover at the UK subsidiary of Spain’s biggest Cava producer fell nearly 3% (2.77%) to £15.88m in the 12 months to 30 April, according to records filed this week at Companies House, down from £16.34m in the previous year. However this marked a slow down from the previous year, when sales fell 20% from £.20.68m.

Profits were also hit, and the company reported an operating loss of £173.7k, down from a £124.6k profit the previous year.

The company said Prosecco had proved a “tough competitor” for sales of its Cava, as the Italian sparkler continued to enjoy growing popularity. But it also cited the changing pricing strategies of the major multiples as a contributing factors.

“This year saw a shift away from deep discounting and the use of half price trade driving products towards shallower discounting from a lower price. The latter change resulted in a sharper reduction in volumes of the company’s trade driving products,” it explained.

Although it maintained its presence on shelf despite the “significant” shrinking of the multiple’s wine categories, and secured a larger share of the reduced range, it said this investment had hit percentage margins.

Gross margins fell 15 from 17%, it said, contributing to the “small loss”.

Despite these challenges, it said it was pleased with the growth of its core Cordon range, particularly Cordon Negro, which saw volumes up 56% year-on-year. This range would remain a focus for the company, alongside its new Freixenet Ice Cava, which launched in April.

In April, reports emerged that the Spanish-based parent company Freixenet had received a buyout offer, shortly after German drinks group Henkell confirmed it was in preliminary talks with the Catalan-based company.