Sales boost for Chapel Down, but investment hits profits

English sparkling wine, spirit and beer producer Chapel Down saw total sales rise 18% to £6.74 million in the first half of the year, but the company’s losses grew to £1.03 million on the back of increased investment.

The Kent-based producer saw year-on-year sales across its wines and spirits portfolio rise 21% to £4,748 million, up from £3.98 million last year, with gross profits up 26%. Although the spirits operated in a very crowded market, chief executive Frazer Thompson said spirit sales grew 45% to £441,000.

Wine sales were in line with previous years, he said, although volumes rose 10%, reflecting the larger amount of still wine available on the back of 2018’s harvest.

According to the figures, wine sales were up by 17% on the same period in the previous year, to around £4.31 million.

“2020 will see substantial growth in sparkling volumes when the sparkling wines from the 2018 harvest come on stream,” Thompson said.

Demand for sparkling wine had continued to exceed the company’s ability to supply, but stock was up 37% on the back of the “extraordinary” 2018 harvest.

“We are greatly encouraged by the prospect of another outstanding harvest with excellent yields and high quality fruit,” he said.

This year, the company has planted an additional 154 acres of vineyards in Kent, close to its existing Kit’s Coty vineyard, which will boost its total supply acreage to 789 acres and will come on stream by 2023, allowing it to produce around 2.3 million bottles of wine in an average year.

Challenging market

Meanwhile its beer subsidiary, Curious Drinks Limited saw growth of 15% to £1.99 million, boosted by the opening of its retail outlet and restaurant, and gross profits up 25% to £680,000, despite disruptions caused by the sudden loss of its contract brewing partner.

However, the company recorded overall losses of £1.03 million, up from £230,000 last year, as a result of investment in its brands, infrastructure and supply.

Chief executive Frazer Thompson warned about the highly competitive and challenging marketing place, and said it was important to provide consumers with innovation and excitement and create relevant brands that they can engage with and that can provide memorable experience.

“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.”

“Our focus remains 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. Brands that are relevant with which they can engage and that provide memorable experiences.”

The company has recently included a new gin-making experience at its Gin Works bar, restaurant and distillery in Kings Cross, which opened in January this year and In May it completed its new Ashford brewery which it said would give it greater control over its growth as well as bringing better margins and “a highly visible point of difference”.

“Despite the disruption caused by [the loss of our contract brewing partner suddenly and the late completion of the brewing kit] the new brewery is a big and highly visible step forward in the brand’s journey,” Thompson said.

“The Company is changing gear as we build our brands and invest for the future.”