NEX Exchange profile Chapel Down Group Plc

Aside from a multitude of accolades and awards for its wines, the company really came to the notice of the general public in 2011, when Chapel Down was widely reported to have been served at the wedding of Prince William and Kate Middleton. According to Andrew Jefford, the wine writer, “Chapel Down is one of the long-term pillars of the UK wine creation scene and has many fine wines under its belt. What Thompson doesn’t know about selling drinks would fit on the back of one of his wine labels. We caught up with him to ask about the highs and lows of the wine world – and why he chose NEX Exchange when it came to floating the company.

The antecedents of what was to become Chapel Down were bumpy until in 2001 two Kent vineyards – at Lamberhurst and Tenterden – put their assets together, and Thompson joined. Chapel Down has expanded, and today is not just Britain’s biggest winemaker but also produces and markets beer, gin, and vodka.

What have been the highs and lows of life for Thompson since 2001? “The highs are easier than the lows. Raising £20 million and getting Black Rock and IPGL as investors last year, plus the World record crowdfunding in2014, were recent personal highlights.

Seeing the brand in the major supermarkets, in great restaurants, and in bars in New York gives you a real buzz. And we have been really lucky with the people we have – not only our lead investors like Nigel Wray, but we’ve been incredibly fortunate in getting a terrific bunch of people to come and work with us”.

As for the lows, “God is not the most reliable business partner you can have – bad harvests can be frustrating,” says Thompson. “2012 wasn’t a great year in terms of the harvest although a great year in terms of profile for English wine, thanks to the Olympics. But the biggest low was probably when we had a fire in 2004 – that really knocked us back. Had we not already raised money from Nigel Wray and others
we would have been very close to going bust.”

The decision to go public is explained by Thompson because establishing a good wine business is cash-degenerative over a number of years whilst the vines grow and bottles are stored before sale. The establishment cost is initially high, and if you are growing fast you need access to further cash as the business grows. To do that credibly, you also need to demonstrate good financial disciplines” says Thompson. “NEX Exchange forces you to ensure that you get those disciplines engrained in your company for your investors. It is low-cost and has been a good exchange for us – it’s enabled us to grow. At some stage investors want to sell, and NEX Exchange gives them the opportunity to do that. The levels of trade in our stock that go through are about the same as the average AIM company. So we have decent levels of liquidity,” says Thompson.

In the first week of September Chapel Down announced that it had conditionally signed long term leases over an additional 388 acres of prime land on the North Downs of Kent, showing that a reputable public
company with institutional shareholders has no trouble in growing its business. Thompson has a very clear sense of where he is taking the business: “The drinks business, more than almost any other category, have higher intangible asset values because the brands have to be strong. People don’t buy much own-label beer, wines or spirits. They buy brands. The value of those brands is extraordinarily high. The business is all about the creation and maintenance of world-class brands. If you get that right, the potential for global expansion and value is enormous.”

Frazer Thompson Chief Executive Officer
The Chapel Down Group Plc