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Chapel Down says “very well placed” to weather the crisis but temporarily stops beer production

Published:  01 April, 2020

Chapel Down has said it believes it is “very well placed to weather the crisis and thrive in the aftermath”, but has temporarily closed its beer and cider arm, Curious Brewery.

In a coronavirus (Covid-19) update, the major English wine producer said “strong assets, good management and a healthy cash position”, put the business in a good place. 

However, given that its beer and cider sales are largely focussed on the on-trade, Chapel Down said it had taken the decision to stop brewing and close the brewery until the on-trade "returns to normality" in order to conserve its cash. 

“We have sufficient stocks / work in progress to trade through with bottled product to take home and online customers for up to six months,” it said.

The management team and board of Chapel Down had been focussed on delivering swift responses to a number of recent government announcements, it added.

“Following the government’s advice to close pubs, theatres and hospitality venues to contain the spread of the virus, we have seen our sales in supermarkets and off-licences grow substantially and our on-line sales multiply dramatically as customers seek to continue to enjoy our brands at home.”

While Chapel Down said it was too early to extrapolate any trends, it said that if the current sales rate continued, the off-trade sales and on-line growth of its wines would “more than make up for the loss of on-trade wine sales”.

It would “certainly leave us with a stronger business and an increased market share in these areas where we see long term growth”, it added.

“These are challenging times, but we believe that the company is in a better position – strong in on-line and off-trade sales – than nearly all its competitors in English wine and craft beer,” said CEO Frazer Thompson.

“We have a good relationship with our bank HSBC, solid tangible assets and great brands. I believe we are in a very strong position to weather the crisis. Demand for our brands remains extremely healthy. We have taken swift and decisive action to ensure that the company is well placed for the aftermath and has the talent to compete immediately.”

The company has also taken significant steps to conserve cash and reduce spend across the business and has suspended all non-contracted capital expenditure with the exception of the committed development of the vineyards planted in 2018 and 2019.

The government support, which has enabled Chapel Down to furlough staff directly affected by the change to the business, would enable the business to “get back up to speed quickly when the all clear is given”, it said, adding the board, executive and senior managers in the company had all taken 20-40% salary cuts for the duration.

“Following the above actions and based on prudent assumptions we have adequate cash for the foreseeable future,” it said.