Chapel Down (LSE:CDGP) is strengthening its position in the growing English sparkling wine market, with strong revenue growth, improving profitability and an increasingly premium product mix supporting its ambition to become one of the world’s great sparkling wine houses.
The company delivered an encouraging first-half performance, with revenue increasing by 19% and adjusted EBITDA rising by 27%. Speaking to The Watchlist, CEO James Pennefather highlighted the continued momentum across the business, with growth extending beyond the first half and into the third quarter. Chapel Down has also raised its EBITDA forecast for the full year, reflecting confidence in the trading outlook.
For investors, the performance underlines how Chapel Down is seeking to translate growing demand for English sparkling wine into a stronger, more profitable business.
English Sparkling Wine Benefits from Changing Consumer Trends
Pennefather identified three significant trends supporting the English sparkling wine category.
The first is the growing popularity of English sparkling wine among younger consumers. Millennials account for 34% of the UK adult population but represent 57% of English sparkling wine drinkers, providing an encouraging foundation for the category’s long-term development.
The second is the expansion of sparkling wine beyond traditional formal celebrations. While Champagne remains closely associated with major occasions, English sparkling wine is increasingly finding its place at birthdays, wedding anniversaries, outdoor gatherings and other informal celebrations. This broadens the range of occasions in which consumers choose high-value sparkling wine and creates additional opportunities for the category to grow.
A third supportive factor is the changing climate, which Pennefather said is benefiting viticulture while contributing to more outdoor festivals and sporting events where sparkling wine is well positioned.
Together, these trends are helping to create a favourable environment for Chapel Down as it builds its brand and expands its presence in the market.
Premiumisation Strengthens the Business Model
A central element of Chapel Down’s strategy is its focus on traditional-method sparkling wine, produced using the same fundamental winemaking method associated with Champagne.
This premium segment now accounts for 74% of the company’s total wine sales, demonstrating the progress made in shifting the portfolio towards higher-value products.
The impact is already visible in the company’s financial performance. Chapel Down reported a 3.5 percentage-point increase in gross margin in the first half, supported by the growing contribution from traditional-method sparkling wines.
The strategy combines premium positioning with a focus on quality, brand development and the potential to build a more valuable product portfolio over time.
Chapel Down’s wines have also received 13 gold awards over the past year, providing further recognition of the quality underpinning its premium ambitions.
For the business, the opportunity is not simply to sell more wine, but to increase the contribution of products that support stronger margins and reinforce its reputation in the premium sparkling wine market.
Single-Vineyard Wines Offer Further Potential
Chapel Down is also developing its single-vineyard offering, using the distinctive characteristics of its Kent vineyards to create wines with a stronger sense of place.
The company’s Kits Coty vineyard, planted in 2008 across 100 acres of the North Downs, has produced wines that Pennefather described as exceptional. The results have given the company confidence to plant a further 650 acres along the same strip of chalk soil.
Chapel Down has now launched its first-ever Blanc de Noirs from Kits Coty, using the 2021 vintage. The release represents another step in developing the vineyard’s identity and expanding the company’s premium range.
Two further single-vineyard developments, Boxley Abbey and Buckwell, are planned for the years ahead, creating additional opportunities to showcase the characteristics of individual sites.
This approach gives Chapel Down another way to differentiate its wines, develop its brand and target consumers seeking distinctive premium products.
Building a Leading English Sparkling Wine Business
Chapel Down’s recent performance reflects the combination of a growing category, an increasingly premium sales mix and a clear strategic focus on traditional-method sparkling wine.
With revenue growth continuing, adjusted EBITDA increasing faster than revenue in the first half, and the company raising its full-year EBITDA forecast, the business has demonstrated encouraging trading momentum.
The longer-term opportunity centres on establishing Chapel Down as a recognised international sparkling wine house, supported by the quality of its wines, the strength of its brand and the distinctive characteristics of its 1,000 acres of Kent vineyards.
As premium sparkling wine continues to account for a greater proportion of sales, Chapel Down is positioning itself to benefit from both category growth and improvements in its product mix.
For investors, the company’s progress offers a clear view of its strategy: building a premium brand, expanding its range of higher-value wines and seeking to convert demand for English sparkling wine into sustainable growth and improved profitability.
For more information visit – https://chapeldown.com
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