Chapel Down Group plc

Idea

Read the share offer document (pdf)

Introduction

13 years ago we embarked on a journey to transform people’s opinions about English wine. It’s been a long, tough and sometimes frustrating mission. Some people thought we were mad. Some thought we weren't.

All agreed that there was a lot to do. But we never lost faith and we believe much of the hard work has now been done. A secure supply of high quality fruit, a winery capable of making World Class wines, a hatful of international awards, a great brand, blue-chip customers, outstanding people and a business that is already profitable are already in place.

But now the journey becomes even more exciting. We’ve convinced people that we make a great product. Consumers want Chapel Down wines and Curious beers. What we need to do is to make a great deal more of them to satisfy their demand. That’s where you can help by investing with us.

In July 2013, the Company raised £4.35 million through a new equity issue at £0.17 per share, mainly through large investors and institutions. The price per share for this round is £0.28 per share. The proceeds are being used to increase the production of both still and sparkling wines and beers and for improving systems, winery equipment, hiring new people and marketing purposes. The Company has planted new vines across Kent to start the journey to satisfy demand for Chapel Down products.

We are already admitted to trading on the ISDX Growth Market and this is the first time that we're aware of that a listed company has undertaken an equity crowdfunding campaign anywhere in the world. We are passionate about our current customers as well as acquiring new ones, and we strongly believe that raising funds through a crowdfunding campaign is the perfect way to enable our current customers to easily become shareholders as well as recruiting new customers who are interested in investing in us.

If you do decide to invest in us, not only will you become a shareholder in our company, you can enjoy some great discounts on our products. We are happy to offer the following discounts and offers:

Intended impact

WE BELIEVE IN MAKING GREAT WINE AND BEER

English wines, and Chapel Down in particular, have been winning critical acclaim and wide recognition for the last ten years.

If someone had told us in 2001 that in 2013 Chapel Down would win three gold medals at the Decanter World Wine Awards, even we would have raised an eyebrow. And yet that is exactly what happened. But it is not just Decanter. The International Wine Challenge Awards and International Wine and Spirit Awards now regularly award Gold medals and trophies to English winemakers. And with dozens of top awards for our own wines already, that is no surprise to us at Chapel Down.

We also make craft beer.

Our Curious Brew won Gold at the International Brewing Awards and the Trophy for Best Lager under 5% in 2012. It’s a distinctive and original beer made using our winemaking knowledge - a lager beer re-fermented with sparkling wine yeast and given a late hop dosage of a rare hop called Nelson Sauvin which makes it a more unique beer.

WE BELIEVE THE FUTURE LOOKS VERY BRIGHT

As you arrive in England from the sea that has shaped it, you see the chalk cliffs of Dover. This is the very stuff from which Champagne dreams are made.

With a geology and climate that is very suitable for making World Class sparkling wines and unique, light fresh still wines, we believe the future is bright for a young industry without the baggage of tradition and heritage and with its eye firmly on the needs of today’s customer.

It’s no surprise to us that English sparkling wines in particular are becoming more highly regarded in the UK with more and more restaurants and bars stocking and selling. And with a unique proposition in another fast growing sector of the market – craft beer – we are well placed for further growth.

Substantial accomplishments to date

WE ARE PERFORMING WELL

With two low yielding grape harvests in a row (2011 and 2012) stock levels have had to be managed carefully and have been very low preventing rapid growth.

However, 2013 was a much more fruitful harvest and 2014 looks set to be the biggest and possibly our largest ever. There’s always a risk that the weather dampens growth so we have extended our winemaker's philosophy into another fast growing area – craft beers – where we can add a real point of difference. And the results have been excellent.

A recent report shows Chapel Down is the 9th most listed wine brand (including still wine and Champagne) in London bars and restaurants. On a par with Krug, Chapel Down has more listings than Veuve Clicquot, Dom Perignon, Louis Roederer and Ruinart Champagnes!

Every time we see a bottle of our wine or beer in The Royal Opera House, The Donmar Warehouse, The Royal Festival Hall, a Gordon Ramsay or Jamie Oliver restaurant, or on the shelves of your local Majestic or Waitrose we get a sense of pride. It’s a great feeling. You can enjoy that same sense of pride by becoming a shareholder and joining us on our journey.

At 14.6% value growth in 2013, sparkling wines are the fastest growing sector of the wine industry. Indeed, sparkling wines were the only Beer, Wines and Spirits category to show growth during 2013 and the category with the largest value growth for Q1 2014 (val +14.4%, vol +7.2%).

Wines (including sparkling and still) above £10.00 RSP have grown by 21%, the highest performing bracket after £8.01-£9.00 (+27%). Our wines retail at approximately £9 - £16 and have sold out every year.

At 79% growth in value, craft beer is the fastest growing sector of the beer industry.

Curious Brew has grown by 570% in the last two years with its compelling proposition that could only come from a winemaker!

WE BELIEVE OUR FUTURE IS BEING SECURED

At Chapel Down, our own vineyards are in Kent. We believe that Kent provides the finest overall conditions for grape growing in England.

However, we also source our fruit from a wider geographic area – from Essex to Hampshire - to ensure we maintain consistency and that the risks of crop failure through frost, unusual weather events and climate are reduced. We have 13 growers supplying us with fruit who have the benefit of a long term contract with us, and who enjoy the help and advice we can provide from our own vineyard experience to enable them to grow better, more valuable fruit. And we are adding more suitable land to grow the best fruit possible.

WE BELIEVE WE'VE GOT GREAT PEOPLE

We've been investing in English wine for 13 years.

We believe we have developed a top class management team who have created an exciting and valuable young brand and assembled a team of highly passionate and enthusiastic people who bring the brand to life. It’s a premier crew! A visit to Tenterden will demonstrate their passion, so don’t take our word for it, come and enjoy the experience for yourself.

Some of our people also own a slice of the company. Perhaps that’s why we get such good reviews on Trip Advisor.

And you can buy the same shares, and get the same deal that we have.

You can find our half-yearly report here: http://www.isdx.com/ForBrokers/TradingData/Anno...

Monetisation strategy

OUR BUSINESS IS IN GOOD SHAPE

We own the freehold on 179 acres of land, 64 acres at Tenterden (of which 16 acres are vined) and the biggest vineyard in Kent (at 115 acres of which 95 are vined) at Kits Coty.

We own the freehold of our winery, shop and restaurant at Tenterden which
is our home. You are very welcome to come and have a look around and metaphorically “kick the tyres”.

We know we are lucky to work in such a beautiful and inspiring place. It helps us to surprise and delight the 50,000 people who make the pilgrimage to visit us at Tenterden every year.

We believe that’s 50,000 people with a better impression of our brands and our people.

We have been making wine here for 13 years and we hold substantial stocks of sparkling wine which have enabled us to manage our supply to meet the growing demand for our wines. Our stocks are valued at cost.

Use of proceeds

The funds raised are intended to:

» plant more vines to grow more fruit to make more wines;
» build a new winery, distribution and storage facility;
» build a brewery and visitor attraction; and
» extend the hospitality facility at Tenterden which is a key part of our marketing approach.

Most importantly though, we want more people like us, who believe in our future to help spread the word about our wines. The higher the demand for our wines the better.

We have leading brands; Chapel Down in wine and Curious in beer and cider. We want to grow them both faster.

That requires more money as outlined above. And we’d rather get that money from people who care. People who want to see our company flourish and grow and can help us spread the word.