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UK winemaker Chapel Down has scrapped plans to build a £32mn winery as part of a strategic overhaul it hopes will return the business to profitability amid slowing demand for English wine.
James Pennefather, Chapel Down’s chief executive, said cancelling the long-planned Canterbury site would save “significant” capital spending and would not affect growth targets.
The company also announced that Michael Spencer, Chapel Down’s largest shareholder and the billionaire founder of brokerage ICAP, would become non-executive chair.
The UK’s largest winemaker has had a challenging few years, swinging to a loss in 2024 after consumers cut consumption and poor weather hit the harvest.
Last October, shares in the company fell 20 per cent after it announced it had abandoned plans to sell itself and downgraded its sales forecast.
According to WineGB, the trade association for UK wine, sales by volume of sparkling wine plateaued in 2024 compared with 2023. Combined sales of still and sparkling wine rose 3 per cent, a significant slowdown from 2023, when English wine sales rose 10 per cent.
Pennefather said English sparkling wine was still popular despite recent weakness and reaffirmed the company’s expectations of strong growth and a return to profitability by the end of the year.
The retail sales value of Chapel Down’s sparkling wines is growing 12 per cent a year, according to Nielsen data. The company has 35 per cent market share of English sparkling wine sales in supermarkets and other retailers.
In the six months to the end of June, its revenues grew 11 per cent to £7.9mn while gross profit increased 7 per cent to £3.7mn.
Net debt rose to £11.3mn in the six months, up from £5.8mn in the same period last year as it invested in its vineyards.
The UK wine industry has been grappling with weaker demand and variable harvests. Many of the largest vineyards are either lossmaking or heavily in debt, and in search of investors to fund increased production.
Chapel Down itself was looking for a buyer last year, but scrapped the sale after it found “there were no transactions that would create superior long-term shareholder value”.
Pennefather said a sale was “no longer on the table”. “Our leading shareholder has stepped up to be non-executive chair. He’s very excited about the growth opportunity and is increasing his involvement,” he added.
Spencer is the largest shareholder with a 28.6 per cent stake held through his family office IPGL. The second largest is former Saracens rugby club owner Nigel Wray, who owns 14.8 per cent.
Chapel Down has faced more competition as rivals have increased production and offered cheaper wines. Pennefather said he was happy with Chapel Down’s prices and products.
“Our strategy is to have the same quality credentials as champagne with a more approachable positioning,” he said. “Not only for formal occasions but also the more informal, everyday, what we call the big little moments.”
