Chapel Down to double production
Chapel Down CEO Frazer Thompson has stressed the need for consolidation among English wine producers, describing his own business as occupying “a fairly aggressive” position from which to make such a move.
“There is very obviously going to be some form of consolidation to happen in the English wine industry,” he told the drinks business. “People are selling their wine far too early – when you see 2012s being sold that’s far too young for something that good.”
Commenting on the highly fragmented nature of the English wine sector at the moment, Thompson remarked: “If we’ve seen 4.5 to 5 million bottles produced this year, in the hand of three or four people rather than 47 – or whatever it is now – then those numbers start to make more sense on an international scale.”
While not revealing any specific current plans in this direction, he observed: “As a leading brand and one of the biggest players, we’re obviously in a very strong position to consolidate. There’s £6m in cash on our balance sheet and no debt – that’s a fairly aggressive place to be standing.”
Much of that cash has come from Chapel Down’s high profile crowdfunding push in September, which saw the Kent beer and wine producer raise a final total of £3.95 million in exchange for 14.11% equity.
Some of those funds will go into the beer side of the business, where there are plans to build its own brewery. However, Thompson maintained that the beer arm – which generates valuable cash flow, especially in more difficult grape growing seasons – “doesn’t require a huge amount of growth investment; it funds itself.”
Instead, he outlined the growth opportunity for Chapel Down’s wine operation that has been opened up by this new investment. In particular, Thompson confirmed plans to add a further 400 acres on top of the 292 acres that the producer currently either owns, contracts or manages.
Although noting that, once vineyard and wine maturation are factored in, it will be nearly a decade before any wine can be released from these new sites, Thompson indicated that the move would add “another million bottles” to production. Such growth would effectively double this year’s expected volumes from a record harvest for Chapel Down, in common with a number of other English wine producers.
“We were over 40% up in terms of quantity, but the even better news is the quality this year,” reported Thompson in anticipation of a “one million bottle harvest.” Nevertheless, he acknowledged that such output remained relatively small in the context of building a serious wine brand.
“The idea of creating a brand without going to the supermarkets I find a little difficult to get my head around,” commented Thompson. “Chapel Down is one of only two brands with the consistency to be able to supply supermarkets on a long-term basis. If I was a supermarket buyer, I would be very nervous of taking a small producer on.”
Despite his ambitious growth plans, Thompson set out a contrasting approach to fellow English producer Rathfinny, which has set its sights on selling 50% of its wine overseas, as he indicating that exports had a smaller role to play in Chapel Down’s current strategy.
“It’s not impossible in sophisticated markets and we do have a point of difference, but it’s never going to be enormous,” he suggested. Although confirming that the company was exploring opportunities for its wines in “anglophone and anglophile” corners of the Far East, as well as the US and Canada, Thompson maintained: “We have the biggest sparkling wine market on our doorstep.”
Instead, the former global brand director for Heineken pointed to bigger export scope for Chapel Down’s beer and “Curious Apple” cider. “I can imagine selling huge amounts of beer and cider in France and Germany,” Thompson remarked. “There’s an instant credibility to English beer and cider that doesn’t automatically come with English wine yet.”