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.

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.

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Earlier this week, the stock jumped 10% after the company released a promising harvest update. Yet at 38p, the share price is still down 50% since last summer, giving Chapel Down a modest £66m market-cap.

Bumper crop

The company, which is known for its sparkling wines, has just finished the September/October harvest. And the good news is that this year’s yield’s expected to be 2,882 tonnes compared to 1,852 tonnes in 2024. The average yield of 3.7 tonnes per acre was 15% higher than the historic five-year average yield.

Obviously, the warm summer we’ve just had was a blessing for English vineyards. And Chapel Down said these optimal conditions resulted in grapes with “a good balance of ripe fruit flavours for complexity and texture with the natural acidity that will add a fresh, crisp backbone to our wines”. 

This harvest was the second highest yield ever for Chapel Down and takes us one step closer to achieving our ambition of winning an equivalent 1% share of the global Champagne market by 2035.

CEO James Pennefather.

Growing sales

Based on current trading, the board’s confident of meeting market expectations for 2025. According to my data provider, this is for revenue of £19m, which would be roughly 16% year-on-year growth.

Back in June, Chapel Down saw an 11% rise in net sales to £7.9m, boosted by a 30% rise in off-trade (retail) sales. International sales grew 17% as it benefited from new distribution partnerships with Jackson Family Wines in the US and another in Norway.

Historically, France, Italy, and Spain have dominated global wine production. But areas in southern Europe are being hit by more frequent droughts and heatwaves due to climate change. By contrast, cooler English vineyards are reaping the benefits, as we saw with this year’s crop.

However, with UK bars and restaurants struggling, future growth will probably have to come from overseas. So international sales growth is something investors should keep an eye on.

Capital intensive

According to Grand View Research, the global Champagne market is expected to grow to around $9.8bn by 2030. Capturing 1% of this by 2035 would translate into about $100m (roughly £75m). So there’s plenty of growth for Chapel Down to go after.

For a stock to really explode in value though, we would need to see substantial earnings growth. And this is what’s lacking here, with the forecasts showing either a small loss or small profit for this year.   

Winemaking is capital intensive because vineyards take a few years to mature. So more cash might need to be raised, potentially diluting existing shareholders.

In June, the company’s net debt increased to £11.3m, as it invested in new vineyards and built up inventory from last year’s harvest. While the firm had £20m headroom, using debt to fund growth obviously adds risk.

Millionaire-maker potential?

This penny stock might make some risk-tolerant investor a fortune, were they to invest a large enough sum. But as things stand, I think this one is too speculative for my own portfolio.

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A billionaire tops up

Since I last covered this stock, Lord Spencer of Alresford, the billionaire founder of inter-dealer broker ICAP, has increased his already hefty stake in Chapel Down.

Recent filings show his investment vehicle, IPGL, bought another 450,000 shares, taking his holding to more than 27%. That cements his place as the company’s largest shareholder — ahead of serial investor Nigel Wray on 13.8%.

Spencer will soon move from non-executive director to chair, following Martin Glenn’s planned departure in September. The board’s also bringing in former Britvic CEO Simon Litherland as an independent director. That’s a strong drinks-industry CV to add to the table.

A growing business in wine

Kent-based Chapel Down cultivates over 1,000 acres of vines, of which at least 750 are fully productive. It supplies still and sparkling wines to high-profile partners including Ascot, The Boat Race and the England and Wales Cricket Board. Sparkling wine’s the strategic focus, making up 70% of revenue.

The first half of 2025 brought an 11% rise in net revenue to £7.9m, with growth driven by a 30% jump in off-trade sales — that’s retail, rather than bars and restaurants — thanks to new supermarket listings, better shopper marketing and a strong Easter campaign.

Meanwhile, international sales rose 17% to £500,000, helped by new partnerships in the US and Norway. On-trade sales rose modestly, but direct-to-consumer revenue fell 7% after last year’s one-off promotions weren’t repeated.

Chief executive James Pennefather, who joined from The Lakes Distillery in November, said Chapel Down entered 2025 with “strong momentum” and remains confident of hitting full-year expectations.

The company retains headroom under its £20m credit facility. However, net debt rose to £11.3m as it invested in new vineyards and inventory from the 2024 harvest.

Valuation and potential

On 2025 estimates, the shares trade at about 4.6 times enterprise value (EV)-to-sales and a steep 25 times EV-to-EBITDA. That’s not cheap on near-term earnings — but those multiples could compress quickly if revenue continues to grow at a double-digit clip and margins normalise.

The real attraction here is operating leverage. Vineyard planting takes years to mature, but with over 1,000 acres already in the ground, the business has the capacity to scale without proportionate cost increases.

While there’s a lot to like here, the outlook’s relatively uncertain. Weather patterns are unpredictable and can greatly impact harvest size and quality. As such, analysts don’t appear to have an earnings per share (EPS) forecast for the company. Collectively, these factors introduce an element of speculation.

For me, it’s a stock that’s simply going to remain on my watchlist. I do have some belief that the stock could offer long-term appreciation as its acres mature, potentially making big-sum investors millionaires. However, it may be too speculative for me in the near term.

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Since listing at the end of 2023, Chapel Down has lost around a quarter of its market value. However, it’s up 34% from a February low and now sits at 43p. 

After posting a loss last year, the sparkling wine specialist said it expects to generate strong sales this year and return to full profitability. 

Longer term, it intends to not only dominate the English winemaking scene, but also export its bubbly globally, especially to America.

Needless to say, if it becomes an exporting powerhouse, its market cap of £75m could one day froth up to a much higher figure. Indeed, it might even become a millionaire-making penny stock, depending on how much one invested.

So, should I snap up some shares for my ISA, just in case? Here’s my take. 

Our terroir shares many of the characteristics which have made Champagne so successful as a wine region.

Chapel Down Chair Martin Glenn

2024 results

Chapel Down has a 16% share of the English wine market. At the end of 2024, it had 1,024 planted acres of vineyards, around 10% of the UK’s total.

Last year, e-commerce (+22%) and on-trade (+16%) channels did well, but off-trade was weaker, as supermarkets and wine retailers reduced their stock levels. Stripping out its now-closed spirits business, revenue dropped 3% to £16.35m.

This resulted in a small £1.3m loss. As mentioned though, the firm expects to return to profitability this year, then build profits over the medium term.

Challenges

Now, there are a few risks to be aware of here. One is that inflation is creeping back up, which could heap more pressure on consumer spending. 

The fourth quarter is the most important trading period for Chapel Down, as households stock up on wine. So a weak festive period would likely throw the full year’s results off-kilter. 

Also, bad weather could result in challenging growing conditions and a lower harvest yield. Of course, this can work both ways, as there was an exceptional harvest in 2023. 

And while global warming should benefit English wine-growers long term, it could also throw up more extreme weather patterns.

Finally, net debt stood at £9.16m at the end of 2024. That was up significantly year on year, and is worth monitoring moving forward.

My move

Chapel Down has signed a new agreement with Jackson Family Wines (a large drinks retailer) for the distribution of its sparkling wines in the US. Millions with English ancestry across the pond could take a special interest, which could be a big growth driver.

By 2035, the firm aims to win the equivalent of 1% of the 300m bottle global Champagne market. For context, it sold around 1.5m bottles of wine last year.

For the stock to really be a big winner, the company will probably need to exceed this target. But that’s far from guaranteed at this point.

Weighing things up, the stock is a bit too risky for me, so it won’t be making me a millionaire.

Of course, that doesn’t mean it can’t still do well. Adventurous investors might want to consider this penny stock at 43p.

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Personally, I think this company has built such a strong brand that it shouldn’t fail. Served at royal weddings and as the sponsor of the Boat Race, it has cemented itself as a household name among its socio-economic target market. There are no guarantees, of course, but let’s take a closer look.

A growing business

Benefitting from climate change, which allows Chardonnay and Pinot Noir grapes to thrive in English vineyards, Chapel Down has emerged as the largest UK producer. It holds approximately 10% of the UK’s total planted vineyard acreage with 1,024 acres.

Net sales revenues totalled £16.4m in 2024. That’s down 5% on the year before, but fourth-quarter sales were up 7% year on year. In fact, excluding the now-exited spirits business,  fourth-quarter revenues would have been 10% higher than last year. According to management, this positive momentum is said to have carried into the new year.

Looking forward, the forecasts provided by analysts suggest that revenue could reach £19m in 2025 and £22m in 2026. This would reflect strong double-digit earnings growth. This is a core sign of the strength of the brand and health of the business.

The weather plays a role

Unsurprisingly, weather still plays a massive role in wine production. The 2024 harvest at Chapel Down was significantly smaller than the previous year, with approximately 1,875 tonnes produced, compared to 3,811 tonnes in the “exceptional” 2023 harvest. Thankfully, what we’ve had already in 2025 could be fairly conducive to a good harvest this year.

That was one thing that weighed on the share price. Another is that plans to put the company up for sale have been abandoned, placing downward pressure on the stock. This is still very much a business in the growth phase. And some investors had been holding on until a larger business bought the company, hopefully for a handsome premium. And with a market cap of £66m, it’s certainly not a big business.

However, the current owners are taking the firm forward themselves. The company’s expansion plans, including the £32m Canterbury winery expansion, aim to increase production capacity to 9m bottles annually by 2032, up from 1.5m in 2021. This is a significant investment, which will see net debt grow from around £9m to around £14.6m by 2026.

But this could deliver the economies of scale that Chapel Down needs to be successful and grow into its valuation.

The bottom line

It’s a stock I’ve been interested in. That’s partially because shareholders with 2,000+ shares receive a 33% discount on full-priced wines purchased directly from Chapel Down. Moreover, noting around £33m in net assets, there’s evidence it could start to look undervalued in the near future if its sales growth is sustained — which I think it will be.

One concern, however, is the trading volume. It’s not really on many investors’ radar and it may take a while for good news to be recognised within the stock price. Personally, I’m just keeping a close eye on this one for now.

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While the share price has collapsed over the last 12 months, the stock offers a combination of tangible assets, premium brand value, and strategic growth in the English wine sector.

However, investors must also weigh operational risks tied to agricultural volatility and market dynamics.

A potential undervaluation

In 2023, Chapel Down reported £34.3m in net asset value — this is where a lot of my interest lies. This includes high-quality, appreciating assets such as 1,023 acres of planted vineyards (414 hectares), with over 595 acres on Kent’s chalk-rich North Downs — a terroir comparable to Champagne.

Interestingly, the board noted that book values likely understate market prices for these strategic land holdings and production infrastructure.

The company’s recent £32m Canterbury winery expansion, approved despite its Area of Outstanding Natural Beauty status, will boost production capacity to 9m bottles annually by 2032. That’s up from 1.5m in 2021. The group’s assets include £22.6m in wine stock.

This is all particularly intriguing given the company’s currently valued at £57m. Subtracting the net debt position (£9.2m) from the company’s assets (which will have appreciated given the debt-funded planting of 118 acres in Buckwell), the actual value of operations is around £30m.

Is the business worth more than £30m? Well, there’s a lot of maths to do here and some unknowns. Will it need to take on more debt to reach that 9m bottle target for 2032? However, assuming modest debt growth, my feeling is that the brand’s undervalued, based on asset value, potential earnings growth in the 2030s, and its very strong brand value — Chapel Down enjoys unrivalled brand prestige in English wine.

Risks: agricultural volatility and market pressures

Nevertheless, there are some risks that need to be accounted for. Wine production remains a very climate dependent operation and the harvest for 2024 is expected to be half the size of that achieved in 2023. Management has already downgraded its sales guidance.

This adds a degree of jeopardy to the company’s expansion plans. What’s more, the firm has abandoned plans to put itself up for sale, putting some downward pressure on the stock — buyouts typically lift shares higher. Moreover, even after a blowout harvest, the stock was trading around 50 times earnings. Clearly, this business is valued on future earnings potential.

A risk worth taking?

Chapel Down combines scarce, appreciating agricultural assets with a luxury brand positioned to benefit from English wine’s global emergence. While exposed to sector-wide climate risks, its scale (largest UK producer), vertical integration, and brand equity create margin advantages versus peers.

It’s certainly an interesting proposition. What’s more, with 2,000 shares (£700’s worth at the current share price) I’d get 33% off all full-priced wines bought directly from Chapel Down. Needless to say, if you serve it at your wedding, which I did, this shareholder benefit can pay for itself.

Bring this all together, and weigh the risks involved in the expansion, the stock could be vastly undervalued. It’s one I’m considering carefully at the moment.

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After falling 51% in 2024, the stock now trades for just 37p. This gives Chapel Down a modest market cap of £64m.

Might this prove to be a millionaire-maker penny stock at today’s price? Let’s ‘pour’ over some details.

Top English wine brand

Just half a century ago, the idea of chardonnay and pinot noir grapes ripening in vineyards across England would have been for the birds. However, the burgeoning wine industry of England — the world’s newest international wine region — is a beneficiary of climate change.

Chapel Down is known for its award-winning sparkling wines, as well as red and rosé brands. It has 1,024 planted acres of vineyards, approximately 10% of the UK’s total.

In 2023, the company sold 887,000 bottles, around 12% more than the year before. Overall, it produced some 3.4m bottles.

That might sound a lot, but it actually translated into revenue of £17.2m and a £3.7m operating profit (when adjusting for AIM-related listing costs). So this is still a small business.

The stock trades at 66 times earnings for 2023, which seems quite a steep valuation. Yet that might not matter if the firm grows strongly.

Uncertain growth outlook

Unfortunately, difficult weather in September and October impacted the 2024 harvest. It was approximately 1,875 tonnes, down from 3,811 and 2,050 tonnes in 2023 and 2022, respectively. The firm expects to create around 1.7m bottles from the 2024 vintage.

We won’t get a trading update until the second half of January. But according to Yahoo Finance, full-year revenue of about £16.5m is expected, which would be a slight decline from the year before. A small pre-tax loss is also expected.

In 2025, revenue is expected to be higher at about £19m (15% growth). From an investing perspective though, I don’t find this forecast particularly exciting.

More vineyards and a new winery are needed to drive growth, leading the winemaker to announce a strategic review of funding options in June. It considered putting itself up for sale, then said it’s remaining a standalone company, at least for now.

However, it only had £1.1m in cash in June. Clearly, it’ll need to raise a significant amount of capital to fund its growth ambitions. This cash deficit adds risk, as does the possibility of unfavourable weather and poor harvests.

Will I invest?

For the stock to be a millionaire-maker, it would have to increase 50 times in value from a £20k investment. All else equal, that would give the company a £3.2bn market cap (similar to Burberry today). I don’t see that happening.

Having said that, I’m a big fan of the brand. In fact, I had a cheeky glass of Chapel Down’s Brut over Christmas. And I’m planning a tour of the winery in the summer, as well as a meal in The Swan (its on-site restaurant).

If I buy 2,000 shares (currently costing about £750), I’d become a Gold shareholder and get 33% of the wine and 25% off food at The Swan. As tempting as that sounds though, this penny share is too risky for my tastes.

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So here are two small-cap UK stocks. They both sit just outside penny stock territory — for different reasons — and both could benefit from long-term trends relating to premiumisation and sustainable consumption trends.

Mulberry

Mulberry (LSE:MUL) stock has underperformed over the past 12 months. The luxury goods brand reported a 4% fall in revenues for 2023 as demand for high-end products slumped.

In the final quarter of 2023, revenues fell 8.4% compared to the previous year. With earnings moving into the red, the share price has sunk, falling 55% over 12 months. The stock currently has a market-cap of £63m and is trading just outside of penny-stock territory at 110p. 

Thankfully, Mulberry isn’t an outlier in the luxury goods sector. LVMH, Kering, and Burberry are among the big names that alerted us to falling demand in the sector. China’s a notable proponent of this falling demand.

However, in the long run, I’d expect to see Mulberry benefit from positive trends in sustainable fashion and a movement towards premium buying trends. High-end fashion stocks tend to trade at high multiples because of the premiumisation trends and strong margins.

But Mulberry’s currently loss-making, and it’s trading around 18 times earnings from 2022. So it’s hard to say the company looks particularly cheap.

Mulberry’s in dire need of a change of fortunes. It’s certainly possible, with the company making sensible investments in new stores in Australia and Sweden as well as ongoing investments in technology aimed at supporting future growth.

But I’m not investing in Mulberry until I see more signs of a turnaround. However, in the long run, I would be surprised to see this stock explode. 

Chapel Down

English wine’s on trend. It’s unique, it’s award-winning, and while output is just a fraction of Italy, France, and Australia, investments in new acreage over the past five years have resulted in rising volumes. 

Chapel Down’s (LSE:CDGP) at the forefront of the British wine industry, producing around 30% of total volume. Situated on Kent’s chalky terroir, Chapel Down produces high-end, award-winning wines as well as some of England’s most reasonably priced bottles. Its volume, range, and quality have allowed it to become the country’s leader in terms of market penetration and brand awareness. 

The company’s already benefitting from premiumisation trends. Young consumers especially are increasingly keen on trying new and more premium wines. Anecdotal evidence suggests this trend started during the pandemic when people had little else to spend their money on.

However, those who bought more premium wines haven’t reverted to buying cheaper as they may have done before the pandemic. Equally, Gen Z is drinking less — that’s a worry — but is targeting better quality products. 

It’s currently a bit on the expensive side, trading around 70 times earnings. But it’s on a strong growth trajectory, with sales expected to register a double-digit increase in 2024. It also has £34.3m of assets, including £22.6m of wine stock. 

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Popular investments in the sector include Treasury Wine Estates and The Duckhorn Portfolio. Conglomerates such as LVMH and Constellation Brands also own wine-producing brands as part of a larger portfolio of luxury goods or beverages.

As such, many people who want to invest in wine don’t buy stocks, but invest in physical wine. Buying wine specifically to store and sell later is an alternative investment strategy for individuals who appreciate good wine and believe its value will appreciate over time.

An English wine growth stock

I’ve been a fan of Chapel Down (LSE:CDGP) for some time. So much so, that my wife and I had it served at our wedding. The company’s at the forefront of the incredibly exciting English wine scene, producing more bottles than any other UK vineyard.

For context, UK winemakers produced around 12.3m bottles in 2023, and Kent-based Chapel Down produced around 3.4m. This figure’s up considerably year-on-year, partially thanks to a bumper grape harvest. The winemaker gathered a record 3,811 tonnes last year — up from 2,050 tonnes in 2022.

While 3.4m might sound like a lot of wine, it’s small-fry compared with brands you see more widely in the supermarket. Nonetheless, its relative scale versus other UK (mainly English) producers means its less premium wines tend to be more affordable than its peers.

Chapel Down also competes with its peers in the more premium part of the market. An award-winning 2016 Kity’s Cote blanc de blancs would set you back £125.

This pricing also reflects the immense quality English wines offer and conveniently-place vineyards like Chapel Down are also in pole position to benefit from premium buying trends. When it comes to wine, millennials and Gen Z are happy to spend more and try new things.

Risks and concerns

Chapel Down’s a small-cap stock. It’s just out of penny stock territory with a market-cap of £111m, but it still represents a risk. Small-cap stocks tend to demonstrate more volatility than their peers.

It’s also not particularly cheap. Chapel Down trades at 70 times earnings for 2023. Moreover, detailed forecasts are hard to come by in this part of the market. Positively, however, management has pointed to double-digit revenue growth for 2024.

The bottom line

This stock has a unique value proposition. If someone have between 1 and 1,999 shares, they get 25% off wines. If they have over 2,000 shares, they get 33% off. In short, the investment could pay for itself in discounts — especially if an investor had something like a wedding in the offing.

Will the stock ever justify its current valuation without the discounted wine? It’s entirely possible, but it’s hard to tell. Chapel Down’s on an impressive growth trajectory, brand awareness and market penetration is growing, and it’s planning to expand its operations to capture more of the tourist market.

It’s also worth noting that the price-to-earnings ratio doesn’t tell the full picture. It has high-quality net assets of £34.3m, including freehold land, buildings, and £22.6m of wine stock. It’s still expensive, but highly attractive for wine drinkers like me.

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