Chapel Down’s sale would reflect British wine going global

Just as Britain’s sparkling wine producers pop corks to celebrate a healthy year, the sector’s leading producer has set down its glass. Aim-listed Chapel Down has announced a strategic review with bankers Rothschild to look at “the full range of long-term funding options”. The Kent-based group says it may go to its shareholders for more equity, or consider outside interest. This follows full-year results that trumpeted a good year of sparkling wine sales and healthy profits.

That might seem odd. Chapel Down has achieved a fair bit over the years. Group sales have climbed by a third in the five years through 2013 to £17.2mn. The winemaker has gone from making losses at the operating line to a £3.7mn profit, adjusted for its costs for listing on Aim last year. English wine is no longer a punchline: Chapel Down’s sparkling wines win awards, most recently a Decanter magazine Best in Show.

And through it all, it is comfortably the largest domestic producer of English bubbly at 887,000 bottles last year. That’s up 12 per cent, even with an average selling price up a tenth. Big well-known backers such as City entrepreneur Michael Spencer, who holds more than 26 per cent, have been supportive. So why sell now?

Maybe because foreign winemakers have noted Britain’s potential. French champagne houses, such as Taittinger, bought land in England for vineyards in 2015. More recently Spain’s Henkell-Freixenet acquired Bolney, one of the oldest producers in Britain. Last year Jackson Family Wines was the first US producer to buy, snapping up acreage in Essex, an increasingly popular wine region in the east of England.

Chapel Down has big plans to increase its 1,023 acres, eventually by half, and build a new winery in time for the 2026 harvest. But the competition means that vineyard land isn’t going cheap. Between 2018 and 2022 almost half a billion pounds was invested, according to Strutt & Parker, with the best vineyard acres commanding 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 to “traditional method” sparkling wines which represent two-thirds of Chapel Down’s output — now ripen better than ever in parts of Britain. That is a big change even from a couple of decades ago.

That suggests Chapel Down needs some bigger backers. Weather and harvests can fluctuate. Its plans will require investors with deeper pockets to step up to the bar.

alan.livsey@ft.com