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As Britain’s sparkling wine producers crack open their bottles to celebrate a healthy year, the sector’s leading producer has decided to put down its glass. AME-listed Chapel Down has announced a strategic review with Rothschild bankers to consider “the full range of long-term financing options”. The Kent-based group says it could approach its shareholders for more equity, or consider seeking external interest. It follows full-year results that reported a healthy year of sparkling wine sales and healthy profits.
It may seem strange. Chapel Down has had a fair amount of success over the years. Group sales rose by a third in the five years to 2013 to £17.2m. The winemaker went from making a loss on the top line to making a profit of £3.7m, adjusted for the costs of its Aim listing last year. And English wine is no joke: Chapel Down’s sparkling wines have won awards, most recently Best of Show from Decanter magazine.
Despite all this, it is the largest domestic producer of English soft drinks, producing 887,000 bottles last year. That represents a 12% increase, even as the average selling price rose by a tenth. It has been backed by big-name backers, such as businessman Michael Spencer, who owns more than 26%. So why sell now?
Perhaps because foreign winemakers have noticed Britain’s huge potential. French Champagne companies such as Taittinger bought up land in England to grow vines in 2015. Spain’s Henkel-Freixenet recently acquired Bolney, one of Britain’s oldest wine producers. And last year, Jackson Family Wines became the first American company to buy land in Essex, an increasingly popular wine region in eastern England.
Chapel Down plans to eventually halve its 1,023 acres and build a new winery in time for the 2026 harvest. But competition means vineyard land is not cheap. Nearly half a billion pounds was invested between 2018 and 2022, according to Strutt & Parker, with the best vineyard acres fetching three times the average price of arable land.
The number of British vineyards, now around 900, will increase as climate change creates better growing conditions. Grapes such as Chardonnay and Pinot Noir – both important for the “traditional” sparkling wines that account for two-thirds of Chapel Down’s output – are ripening better than ever in parts of Britain. That’s a big change even from two decades ago.
This suggests that the Chapel Down project will need some bigger backers. Weather and harvests can be volatile. The project plans will require attracting high-net-worth investors.
Alan Livesey@ft.com
