Henkell Freixenet reports 7.4% sales decline for 2020

29 April, 2021

Henkell Freixenet has reported that net sales decreased by 7.4% year-on-year in 2020 after the Covid-19 pandemic caused bars and restaurants to close for several months.

The world’s largest sparkling wine producer ended the 12-month period with net sales of €1.195 billion, down from €1.29 billion in 2019.

Chairman Dr Andreas Brokemper hailed record turnover in the UK and Scandinavia and noted that sales of core brands increased by 5.2%. Howeverm he added that the impacts of the coronavirus pandemic were “clearly evident”.

“In the first wave, between March and June, consumption of sparkling wine and Champagne came to a stop in many places,” said Dr Brokemper (pictured). “After a fast recovery in the summer months, we were hit by the second wave over Christmas and the New Year, when consumption is traditionally high. Sales of Sekt, Cava and Champagne were particularly affected, whereas Prosecco sales increased slightly.

“Ultimately, we were able to expand our Sekt and Prosecco market share. The Freixenet brand performed particularly well and achieved growth despite the pandemic situation. Wine sales grew significantly as a result of the trend of enjoying wine for a broader range of at-home occasions.”

Henkell Freixenet closed 2020 with turnover of €304.2 million in Germany, Austria and Switzerland, up 1.1% year-on-year.

Sales of Fürst von Metternich, Germany’s most popular premium sparkling wine, hit new heights in 2020 as volume sales grew 18.2%. Wodka Gorbatschow, the bestselling spirit in Germany, also saw 5.1% growth.

Sales in western Europe declined 10.2% to €322.6 million. That was driven by strong declines in Spain, Italy and France. “In Italy and Spain, one out of every two bottles is sold to restaurants, and one out of four in France, so the lockdowns have hit us particularly hard in these countries,” said Dr Brokemper.

However, significant sales growth was achieved in the UK and the Nordics. The I Heart and Freixenet brands both saw double-digit growth in the UK, while the group acquired online retailer Slurp and on-trade supplier Jascots.

Sales in eastern Europe were down 5.4% year-on-year to €164.9 million, and sales in the Americas decreased 20.2% to €133.3 million. The USA and Mexico were badly impacted by bar and restaurant closures.

The Asia Pacific region saw a decline of 15.9% to €42.2 million, while global travel retail sales understandably dried up.

The group has also offloaded various unwanted operations following its takeover of Freixenet in 2018. “Since the Freixenet acquisition we have discontinued non-strategic operations and reduced low-margin business,” said Dr Brokemper. “At the same time, we have revised many of our core brands and launched innovations. This phase has now ended and we are ready to accelerate our business again after the pandemic.”

He is cautiously optimistic about the company’s chances of returning to growth in 2021.

“At the moment we assume that demand will pick up in the restaurant, hotel and catering sector in the second half of the year, depending on the progress of the vaccination campaign and the further development of the pandemic. For 2021, we expect stable to slightly growing consumption in the wine, sparkling wine and spirits segment.

“When restaurants reopen and tourism returns we will see growth especially in the Mediterranean markets, and when flights resume duty-free business is likely to slowly restart. As a result of our strong regional and brand diversification we are confident we can continue to overcome the challenges associated with the crisis and, true to our ‘Celebrate Life’ slogan, we hope to be clinking glasses with our customers again in the course of the year.”

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