As the only standalone wine producer listed in London, Chapel Down (LSE:CDGP) is a rare UK stock. However, it’s also a small one with a £66m market cap, so doesn’t get much attention from institutional investors.
Indeed, Chapel Down has attracted just one share price target from its house broker. But it’s worth noting that this is 57p, an enticing 47% above the current price.
So, might this penny stock be worth a look?
Solid sales growth
Believe it or not, England is currently the world’s fastest-growing wine region. As the climate shifts, the South is starting to become similar to the Champagne region in France.
Based in Kent in the Garden of England, Chapel Down has over 1,018 acres of vineyards, approximately 9% of the UK’s total. It produces a range of sparkling and still wine and sells bottles via off-trade, on-trade (bars, restaurants, hotels, etc), e-commerce, and export.
Yesterday (29 January), the winemaker reported a positive trading update for 2025. For the first time, it dispatched over 1m bottles of traditional method sparkling wines, and there was sales growth across all four channels.
| Channel | Revenue | Year-on-year change |
|---|---|---|
| Off-trade | £9.37m | +38% |
| On-trade | £2.57m | +5% |
| International | £1.01m | +49% |
| E-commerce | £3.86m | +3% |
Chapel Down said export growth was strong due to its new distribution agreement with Jackson Family Wines in the US. Meanwhile, the brand now has 36% share of the off-trade English sparkling wine market. Growth here was driven by new listings, promotional campaigns, and the lapping of retailer destocking in 2024.
All this drove revenue 19% higher to £19.4m, slightly higher than market expectations. Adjusted EBITDA of £4m to £4.5m was likewise above what was expected (£3.5m).
Chapel Down also does vineyard tours and fine dining, and this brought in just over £2.2m last year. Actually, I’ve been wanting to tour the Kent vineyard for a while, so I’ll hopefully get round to that this year.
The company called its 2025 harvest “world-class” after the warm summer.
We are seeing a generational shift into English Sparkling Wine as Millennials, who prefer a lighter, fresher, crisper style of wines, are increasingly adopting the category. Consumers are now choosing Chapel Down throughout the year and for a broader range of celebration occasions than other high value sparkling wines, which gives us a significant opportunity for future sustained top-line growth.
CEO James Pennefather.
One to consider?
As for negatives, one is that the company isn’t yet profitable, as it still works towards delivering “sustained profitable growth in the medium term“. So this obviously increases the risk, especially with the UK hospitality sector struggling.
At the end of 2025, the company had net debt of £12.4m. That was up from £9.2m the year before, mainly due to the cultivation costs of 118 acres of new vines planted since 2023. But these vines should obviously underpin years of future growth, while the firm still has “significant headroom” on its £20m revolving credit facility, according to management.
Looking ahead, Chapel Down is aiming to capture 1% of the equivalent of the global Champagne market by 2035. That would equate to around 3m bottles, suggesting a significant growth opportunity ahead.
While intriguing, this penny stock is still a bit risky for me. But given Chapel Down’s strong brand, growing sales, and over £25m worth of wine stock sitting in cellars, more adventurous investors might want to consider taking a small stake.
