Have England’s winemakers lost their luster?

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When Chapel Down announced in October that it had canceled its sales plans, disappointment spread across the English wine industry.

Optimism about the sector’s prospects increased last year following a bumper harvest and a surge in international property acquisitions. But as wineries struggle to attract buyers and face a poor 2024 harvest and a tight UK budget, the shine has faded.

“It’s a shame because it would have been a very good reference for benchmark valuations,” Ed Mansel Lewis, head of viticulture at property consultancy Knight Frank, said of a Chapel Down sale. “This litmus test has not yet existed, which experts can point to.”

Would-be wine investors are heading into 2025 more cautiously than in previous years, estate agents have told the FT.

Many of the country’s most important wineries are either making losses or carrying heavy debts and are now looking for investors to stay afloat or buyers willing to take on the capital expenditures needed to expand production.

As well as Chapel Down, two more of England’s largest and most pioneering wineries, Gusbourne and Rathfinny, are looking for buyers or partners, with many more private wineries up for sale, according to winery brokers.

Agents said real estate founders who are now established in the industry have reached a point in their lives where they either need to commit to a new investment cycle, sell or pass the business on to a relative.

“It’s not about throwing in the towel, it’s about passing the baton. If you want to make further investments, you need to be able to invest that time. Ultimately it is an agricultural process,” said Chris Spofforth, farm and estate director at Savills.

Gusbourne’s majority shareholder Lord Ashcroft said in July this year that he was considering selling his stake and Rathfinny said it was looking for a partner or buyer in April last year. No public buyer has yet come forward for either property.

“When purchasing an existing business, buyers look at the economics more closely than they used to, so it can take longer,” Spofforth said.

“Economic conditions have become much more difficult in certain parts of the sector and the budget has not helped with that.”

Agents said the higher minimum wage and higher national insurance contributions had hit winemaking in the same way as many other sectors in the UK. Viticulture is particularly at risk because it relies on lower-paid staff, particularly in vineyard operations, said Nick Watson, head of viticulture at Strutt & Parker.

“There was a lot of uncertainty,” he said, citing high interest rates and a rebound in inflation. “No market is immune to these macroeconomic pressures, so we should not be surprised that viticulture is not exempt.”

Hattingley Valley, a renowned sparkling wine producer in Hampshire, made a loss of almost £8 million in the year to September 2023, according to reports filed with Companies House. Meanwhile, payments to creditors due in more than a year stand at £5.6m, up from £4.6m the year before.

Another award-winning property, Ridgeview in Sussex, made a loss of £1.5 million in the year to December 2023.

“There are companies in the industry that took on debt when interest rates were much lower and are now struggling to service the interest,” Mansel Lewis said.

“I think we are likely to see a consolidation where the best performing companies with the least debt and good routes to market start to expand and buy those that are struggling to achieve economies of scale.”

The challenges were exacerbated by the poor 2024 harvest.

The 2024 vintage is expected to produce 6 to 7 million bottles, down 30 to 40 percent from the 10-year average, according to trade group WineGB. In the 2024 crop survey, 70 percent of those surveyed said they had suffered yield losses due to diseases in the vines.

Agents said that despite the difficulties, they are still seeing strong interest from existing players looking to expand, new entrants and from foreign investors.

While previous entrants wanted to build a property from scratch, buyers now preferred an “oven-ready” business with an existing brand and infrastructure, Savills’ Spofforth said.

The agents said consolidation in the domestic market was likely to gain momentum as larger English manufacturers snapped up struggling companies.

“It will inevitably go through a cycle of consolidation,” Strutt & Parker’s Watson said, adding, “but it won’t happen overnight.”