Chapel Down Reports Strong H1 Revenue Growth and Strategic Winery Pivot

Chapel Down’s H1 2025: double‑digit sales growth and a pragmatic winery rethink

Chapel Down has served up an 11% rise in net sales revenue to £7.9m for the six months to 30 June 2025, with wine-related sales up 14%. The company kept its category leadership in UK supermarkets – the Off-Trade (that is, retail channels like grocers and wine specialists) – and says it is on track to meet full-year expectations with strong growth and a return to full profitability.

The big strategic call: after reviewing options, the Board will not build a new Canterbury winery. Instead, Chapel Down will optimise the Tenterden winery for Traditional Method Sparkling and use spare third-party capacity in Kent for some premium still wines. Management says this gives access to 3,300 tonnes of capacity in the medium term, requires no significant capex, and has an immaterial impact on cost of goods.

Key H1 2025 numbers investors should know

Metric	H1 2025	H1 2024	Change
Net sales revenue	£7.928m	£7.123m	+11%
Gross profit	£3.657m	£3.419m	+7%
Gross margin	46.1%	48.0%	-1.9 pts
Operating loss before FV and exceptionals	£(0.299)m	£(0.331)m	+10%
Adjusted EBITDA	£1.233m	£1.591m	-23%
FV adjustment to Biological Produce	£0.202m	£0.773m	n/a
Exceptional costs	£0.221m	£0.224m	n/a
Stock (excl. biological)	£25.566m	£21.866m	+17%
Net debt (excl. leases)	£11.310m	£5.777m	-96%
Operating cash flow	£(0.437)m	£(2.941)m	+85%
Diluted loss per share	0.33p loss	0.05p profit	n/a
Net assets	£32.174m	£34.677m	-7%

Note: “FV adjustment to Biological Produce” is the non-cash valuation uplift recognised as grapes grow through the season. It moves with growing conditions and harvest timing.

What drove the top line: Off‑Trade momentum and sparkling mix

Retail channels did the heavy lifting. Off-Trade sales jumped 30% to £3.8m on new listings – Rosé in Tesco, Grand Reserve in Waitrose, and the annualisation of Bacchus in Sainsbury’s – plus a stronger Easter campaign. Chapel Down sparkling wine sales grew 12% vs the English sparkling category’s 10%, maintaining off‑trade market leadership with a 35% share, up 1 percentage point.

On-Trade (bars, restaurants and hotels) edged up 3% to £1.24m. Distribution grew sharply – unique outlets +15% and “by the glass” listings +43% to 1,313 – but last year’s big pipeline fill into national accounts was not repeated. Exports rose 17% to £0.5m, helped by new partnerships with Jackson Family Wines in the US and Anora in Norway, and good momentum in Global Travel Retail.

Direct-to-Consumer (DTC – online, brand home, tours and events) fell 7% to £2.4m, partly because Chapel Down exited Spirits in 2024 and some events did not repeat in H1 but are scheduled for H2. DTC represented 30% of net sales revenue, down from 36%.

Product mix: leaning harder into Traditional Method Sparkling

• Traditional Method Sparkling net sales revenue rose 17% to £5.2m and now makes up 70% of wine sales (H1 2024: 68%).
• Still and other wines increased 9% to £2.2m.
• Spirits have been fully exited – £0 in H1 2025 vs £0.1m in H1 2024 – consistent with the wine-first strategy.

Margins and profit: short‑term pressure, H2 tailwinds

Gross profit rose to £3.7m, but margin slipped to 46.1%. The squeeze came from three places: the events calendar phasing and lower non-wine contribution; higher costs embedded in the 2022 harvest sparkling wines; and a slightly higher proportion of still wine following the exceptional 2023 harvest.

Adjusted EBITDA fell 23% to £1.2m, but that is largely the flip side of a lower FV biological produce uplift (£0.2m vs £0.8m last year). Strip that out and Adjusted EBITDA improved 26% to £1.0m, showing healthier underlying trading. Management expects a marginal gross margin improvement in H2 as the sales mix premiumises into the festive period.

Strategic pivot: no new winery, capital discipline front and centre

The decision to halt the new-build winery is, in my view, pragmatic. It reduces execution and planning risk, preserves balance sheet flexibility and keeps focus on the core brand. Optimising Tenterden for sparkling – where Chapel Down is strongest – and tapping existing third‑party capacity for still wines should support growth without a big capex bill.

There are trade-offs. Using third-party capacity introduces some operational dependency, and investors should watch cost of goods and quality consistency. Management, however, guides that the cost impact will be immaterial and that total medium‑term capacity of 3,300 tonnes is sufficient to meet growth plans.

Balance sheet, cash and funding: inventory heavy, liquidity available

Stock rose 17% to £25.6m as the company bottled the standout 2023 harvest and continued cultivation. This is normal for a sparkling-led model – inventory is the flywheel for future revenues – but it ties up cash. Operating cash outflow improved to £0.4m from £2.9m, helped by working capital phasing, yet finance costs stepped up to £0.4m.

Net debt (excluding leases) increased to £11.3m. Chapel Down has a £20m Revolving Credit Facility (RCF – a flexible bank line) with an accordion option to £30m, which management says provides sufficient support to build maturing stocks and reinvest in existing assets. Net assets stand at £32.2m, or £0.19 per share, and the Board notes that IFRS book values understate the market value of tangible assets.

Governance and brand: new leaders, same direction

There is fresh leadership with CEO James Pennefather and CFO Louan Mouton, plus the appointment of Michael Spencer as Non‑Executive Chair and Simon Litherland as Independent NED. The core strategy remains intact, sharpened into three priorities: brand value enhancement, sustainable channel expansion, and disciplined capital management. The long‑term ambition is bold – win an equivalent 1% share of the global Champagne market by 2035.

Outlook and my view: positioned for a profitable festive season

The summer weather has been kind. The winemaker is forecasting a high‑quality, above‑average vintage, subject to harvest conditions. Trading since July has remained robust, especially in Off‑Trade, and the Board reiterates confidence in delivering strong sales growth and a return to full profitability for FY 2025.

Positives

• Clear retail leadership – 35% off‑trade share – and new listings driving velocity.
• Mix shift towards Traditional Method Sparkling supporting brand premiumisation.
• Pragmatic capex stance – Tenterden optimisation and third‑party capacity reduce risk.
• Inventory build positions the business for multi‑year growth.

Watch‑outs

• Gross margin still below last year, with inflation flowing through recent vintages.
• Higher net debt and rising finance costs are a headwind if trading softens.
• DTC contribution eased to 30% – H2 execution on events and ecommerce will matter.
• Harvest risk remains until grapes are in the press – October update will be key.

What could move the share price next

• October harvest outcome and any update on yield and quality.
• Peak season trading – especially supermarket sell‑through and festive premium ranges.
• Early signs from the US and Norway distributors as shipments build.
• Confirmation of full‑year profitability and any guidance on FY 2026 margin trajectory.

Bottom line: this is a solid half from Chapel Down. The sales engine is working, the brand is gaining ground, and the winery pivot swaps grand projects for cash discipline. If H2 margins tick up as guided and the harvest lands well, the setup for a profitable year looks credible.