UK winemaker Chapel Down considers raising cash or sale as trade sparkles

Britain’s biggest wine producer, Chapel Down, is considering raising cash and even putting itself up for sale to fund more vineyards and build a new winery in a booming industry transformed by rising temperatures and tax breaks.

Chapel Down in Kent is Britain’s best-known producer, founded in 2002 and is expected to make 3.4m bottles of sparkling and still wines from last year’s harvest. It is looking for more funds for its growth strategy, which includes investing in new vineyards, a new winery to be up and running for the 2026 harvest, and the development of its wine estate at Tenterden.

It said: “As part of the review, the board will consider all alternatives, including investment from existing shareholders, investment from new shareholders, a sale of the company, and other relevant transactions.”

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After posting revenue of £18m last year, the company said it was on track for double-digit sales growth this year. Its shares have risen by 14.5% since their debut on London’s junior Aim market last year, moving from the Aquis Exchange, and fell 1.2% on Tuesday, giving Chapel Down a market value of £111m.

Britain’s wine industry is still small and concentrated in southern England, but rising temperatures created better growing conditions for grapes, resulting in a boom in new vineyards. Vines are being planted as far north as Yorkshire and Scotland, and their UK number has almost tripled from two decades ago to 943. However, in traditional wine-growing regions such as Italy, Spain, France and southern California, extreme heat is expected to decimate harvests.

British wine is also growing in popularity: almost a third of Britons said they would celebrate a wedding with English fizz in a recent Aldi survey, while 15% would serve up champagne at a divorce celebration.

Britain is the fastest-growing wine region in the world, according to the property group Knight Frank. Between 2017 and 2022, England and Wales more than doubled wine production from 5.3m to 12.2m bottles, according to WineGB. It expects wine production to double again to 24.7m bottles by 2032.

The UK has also caught the eye of Pommery and Taittinger, two of France’s best-known champagne houses, which both bought land and planted vines in England about a decade ago, while the world’s biggest sparkling wine producer, Germany’s Henkell Freixenet, snapped up the English wine estate Bolney in 2022.

Last year was a record harvest and will be remembered as a “near perfect year” for vineyards, WineGB said. There was little spring frost, good flowering weather in June, and after a wet July and August some very warm spells in September and October.

Russ Mould, the investment director at the stockbroker AJ Bell, said: “Chapel Down has made a name for itself over the years but the business appears to have a hit the ceiling in terms of scale. To grow even more, it really needs a big slug of cash to invest in the business and that might be better coming from a new, bigger owner, rather than going cap in hand to shareholders on an ad hoc basis.

“Plenty of big drinks companies would be in the market for a niche player like Chapel Down as it could add something new for them to get their teeth into, and also as a way of cross-selling products.”