Chapel Down to open London gin bar and restaurant as sales rise 15%

English drinks producer Chapel Down is to open a bar, restaurant and ‘gin works’ in King’s Cross as the company announces that its year-on-year sales have risen by 15% to £5.72m in the six months to 30 June 2018.

Image: Jason Alden

The new site, which will open subject to planning and licencing permission, will be called ‘Chapel Down Gin Works’ and will include an experiential bar, restaurant and ‘ginnery’.

The Gin Works are 38 minutes by train from the company’s new brewery, which is housed on a 1.6 acre site and is scheduled to open in March 2019.

This month, it has also exchanged on a lease agreement on 388 acres of viticultural land meaning that it will have the potential to produce up to one million bottles of wine a year. This, it says, will make it the largest vineyard of any English wine producer.

Chapel Down has also revealed its half-year results for the six months ending 30 June 2018, which saw sales up 15% to £5.72 million compared to £4.98 million achieved in the same period last year.

Kit’s Coty vineyard.

However, losses experienced in the first half of these year have more than trebled due to rising costs, with losses before tax totalling £328,235 compared to £91,965 in the same period last year. EBITDA has therefore fallen from £235,411 in H1 2017 to £216,075 in H1 2018.

That said, sales are strong, with the wine and spirits division up 19% to £3.98 million (HY £3.35 in 2017) and its beer and cider company up 6% to £1.74m (HY £1.63 in 2017).

Frazer Thompson, chief executive, commented: “Whilst we have been affected by all of the market challenges in different ways, we remain completely focused on delivering solid top line growth at good margins whilst we continue to invest strongly to ensure we continue to build strong and sustainable brands that our consumers and customers love.

“We have taken our first significant steps to grow our international business through a partnership in our most important export market – the USA. We believe we have a distinctive and compelling proposition to offer Champagne’s export markets. This year, depletions in the US have grown by 17%.

“Whilst all the fruit is not yet harvested, we can expect 40-60% more fruit than we have ever received at quality levels to match the best vintages ever in England. We are planting more vines on truly exceptional land to help meet future demand. We planted 102 acres of new vineyards in May and were delighted to secure a further 388 acres of prime land earlier this month which will be planted over the next three years to take our total supply acreage to 950 acres. This will be fully productive by 2024/2025. In an average year it should be producing some 2.4m bottles of wine.

“We have also been very encouraged by the results of our Chapel Down gin and vodka launch. In a crowded marketplace, we have a distinctive product, beautifully packaged and well priced. We have seen success not only in top end London bars and restaurants such as All Bar One, Mr. Foggs and Mark Hix but also in Majestic and more recently, Tesco.

“Sales growth of 6% in a very competitive beer market, despite the disruption caused by the hiaitus at Matthew Clark and Bibendum will improve as we continue to invest in getting the brand message and sampling extended. The new brewery will be a big and highly visible step forward in the brand’s journey. We have blue chip listings in Majestic, Waitrose and Tesco and high class on trade business with M&B and others supported by Matthew Clark.

“We made a conscious decision to continue reinvesting any surplus cash in our people, our systems and our brands. As a consequence, the total business reported EBITDA of £216k, compared with £235k in the six months to June 2017.

“Beer margins have declined following the forced change of our brewing partner in 2017 which has also limited our scope for short term volume growth whilst developing the brand and managing supply. At 31% gross margin from contracted out brewing, we are satisfied with its performance”.