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Chapel Down sees sales soar but profits hit by investment

Published:  01 October, 2019

Chapel Down, the English sparkling wine, spirit and beer producer has reported sales of 21% for the first half of the year alongside increased losses as it forges ahead with vineyard expansion and investment.

Combined sales at the Kent-based business leapt to £6.744m in the six-month period to 30 June 2019, up from £5.5m on the same period the year before, its interim results showed.

Wine and spirit sales rose by 19% to £4.748m, compared to £3.981m in 2018.

Beer and cider sales under its Curious Drinks arm grew 15% to £1.996m, while gross profit jumped 25% due to the opening of its Brewery restaurant and retail outlet on May 10, it said.

The producer said an ‘extraordinary’ 2018 harvest had enabled the business to increase stocks by 27% to £8.25m.

Frazer Thompson, chief executive claimed demand for his company’s wines had exceeded its ability to supply and vineyard expansion was underway.

“We planted a further 154 acres of new vineyards in May 2019 taking our total supply acreage to 789 acres,” he said. “The current planted acreage will be fully productive by 2023 and in an average year it should be producing some 2.2m bottles of wine.”

Chapel Down attributed an EBITDA loss of £1.03m - up from £230,000 in 2018 - to continued investment.

“Our focus remains on delivering solid top line growth at good margins whilst we continue to invest ahead to ensure we continue to build strong and sustainable brands that our consumers and customers love,” Thompson said.

“Brands that are relevant with which they can engage and that provide memorable experiences. To help us do that, we have invested in creating a Gin Works at Kings Cross and a modern visitor experience at our new brewery to complement the existing vineyard at Tenterden.”

The marketplace, he added, was “highly competitive and challenging”.

"We are seeing considerable change in grocery and off-license retailing and the challenges on the high street and in casual dining are, if anything, increasing. We continue to see pubs and restaurants closing. The current market uncertainty means that we can see there is more change to come."

However, Thompson described the growing interest in English wines as “encouraging”.