COMPANY PROFILE: CHAPEL DOWN GROUP PLC

By Gary Mead for NEX Exchange

FRAZER THOMPSON, CEO OF THE NEX EXCHANGE QUOTED CHAPEL DOWN GROUP, IS ONE OF THE UK’S MOST EXPERIENCED BRAND ADVOCATES.    

Like one of his bottles of sparkling wine,
his career has been carefully nurtured
and ripened. Aged 29 he was appointed
a director of Whitbread in 1989, and
then led the team that created the
Boddingtons ‘Cream of Manchester’
campaign, one of the most successful
beer advertising campaigns in recent
memory. Clever marketing ideas are still
close to Thompson’s heart – the slogan
‘Great Minds Drink Alike’ is used for
Chapel Down’s sponsorship of the annual
Oxford vs. Cambridge boat race.

Now he heads the UK’s most successful
wine producer, the Chapel Down Group.
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…[wine production]
is not an easily recouped investment and
anyone in it needs to be there for the long
term. It has to be upmarket, too, as it can
never compete on price with Cava and
Prosecco.”

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 doing the
company’s public listing.

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.

“They say you can’t make great wine without good
beer,” Thompson tells me. Chapel Down
is a genuine success story – all the more
impressive for being in the notoriously
weather-and-disease prone wine sector.
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 in 2014, 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. It’s a
great team that keeps you humble, stops
the hubris and focuses the mind, but never
dampens the desire to be fearless, relentless
and curious. One of the real joys of this job is
that I always go to bed a bit less stupid than
when I woke.”

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.”

However, God has been a great business
partner in 2018. “Wonderful!” says
Thompson. “The harvest isn’t in yet and
you learn that there’s always a potential
twist – nothing’s ever completely perfect.
The growing season is only 22 weeks
and there are still another three to go,”
says Thompson, who has acquired the
cautiousness recognisable from anyone
in the wine business. Harvesting for the
Chardonnay and Pinot Noir varieties starts
late September and runs through October.
“It’s a big crop,” says Thompson. “Quantity
can be OK, but we really want quality.
What’s interesting about this year is that it
has both, potentially.”

Chapel Down has achieved remarkable
things but it’s only just begun. Thompson


says that “as a marketer you look for
‘insights’. Occasionally something comes
out of left field and you realise that it’s
gold dust. We found one, which is that as
winemakers we are given a licence to do
things that other people can’t do. If I were
to ask someone who they’d sooner go out
on a date with – a winemaker, a brewer, or
a distiller – then everyone would answer a
winemaker. Why? The assumption is that
they are more likely to be sophisticated,
educated, romantic and interesting.
Winemakers are given this romantic and
mythical status as they are connected to
the Earth. As a consequence, a winemaker
can make beer, cider or gin that people
will correctly assume is made from better
natural ingredients.”

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. From starting
the business to seeing any return on your
investment takes years. “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 ingrained 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
NEX are about the same as
the average AIM company.
So we have decent levels of
liquidity,” says Thompson.

Chapel Down is planning to double its acreage
over the next three to four years,
to around 1,000 acres, on land that is, in
Thompson’s words “impeccable”. In the
first week of September it took that to over
950 acres when it announced that it had
conditionally signed long term leases over
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.

Aside from awards for its wines, Chapel
Down has been dubbed an official “Cool
brand” by those who know, and is one of
a thousand companies to Inspire Britain
according to the London Stock Exchange.
Thompson has a very clear sense of where
he is taking the business: “The drinks
business, more than almost any other
category, has 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. The
growth in English wine is good but it’s
never going to be a billion pound business.
Spirits on the other hand could be that in
five years’ time, as could beer. There aren’t
the same limits to growth as there are with
wine. What we have as a winemaker is the
chance to create fantastic brands in other
categories."