Nick Speakman was already a successful business owner when he decided to pursue winemaking. His father left him part of the family farmland in Crouch Valley, Essex. It was on this basis that he founded Missing Gate Wines in 2018.
He was in good company. This area is now one of the densest wine-growing regions in the country.
Speakman invested £1.5 million in planting 100 acres of vines to produce premium still wines. Missing Gate has quickly won acclaim for its 2020 Pinot Blanc from UK wine critics. Having previously outsourced its winemaking to reduce cash outflows, it had planned to invest a further £2.5m to expand its winemaking and hospitality facilities.
But with costs already rising, Speakman decided to wait and see what Chancellor Rachel Reeves would announce in it. Initial budget last month before investing. He didn’t like what he heard. Both increases in employee social security contributions and changes to relief from inheritance tax on agricultural land this would be a major blow to the company. He postponed his expenses and laid off three of his colleagues.
“I am disappointed, frustrated at not being able to create more value for my children. But most of all, I hate not being able to do what is obviously the right thing,” he says.
Other winery owners could go further. Making wine doesn’t make money. Relatively high production costs and lower incomes, combined with higher taxes for small businesses, could force some English wineries to sell.
“There are a lot of older owners. . . people who planted 20-25 years ago have a nice house and can no longer do the work,” estimates Stephen Skelton, consultant at English Wine. “It’s time to move on.”
Winemaking in England has grown from a quirky hobby for weather optimists to a rapidly growing industry with tourism potential. There are now more than 1,000 vineyards in the UK producing wine, according to trade body WineGB. These covered 3,353 hectares last year, well over double the 2013 figure, according to Skelton data. He estimates that number has increased further to around 3,800 this year.
Good weather conditions for planting in recent years have helped, especially last year. Grape yields reached record highs, leading to a surplus of wine, enough for around 22 million bottles. This almost doubled the amount for 2022, another big year.
Just as energy and labor costs have ballooned, oversupply has put some downward pressure on English grape and wine prices this year. Worse yet, a wet and cold growing season this year meant much more work and costs for winemakers. Many of these wineries are small operations whose income is insufficient to cope with these changes in overhead costs.
Even some of the more established small estates are considering their options. Two of the UK’s biggest wine producers, Chapel Down and Gusbourne, said this summer they were open to offers. Chapel Down, which trades on the Aim small business market, has an enterprise value of £74m including debt, net of cash, according to S&P Capital IQ. Obviously this is too much money for some. By the end of October, Chapel Down had delayed its plans to sell.
Some winegrowers have already left the company. Linda and Guy Howard purchased Giffords Hall Vineyard, near Bury St Edmunds, Suffolk, in 2011 after Guy retired from a financial career. After her passing at the end of 2019, Linda continued to grow the business. When an offer came to her earlier this year to buy her vineyards, winery and brand, she happily accepted the terms as she was ready to retire.
Now a consultant to other vineyards, she is convinced that she made the right decision. Howard has struggled to help his customers sell this year’s crop, following the bumper harvest of 2023. “I’ve never seen a year like this, without a high demand for fruit. I’ve never had trouble selling grapes, ever,” Howard points out. At least one of his customers also wants to resell.
Real estate agents also feel some concern. At property brokers Savills, Chris Spofforth, director of the farms and estates team, has at least two sellers in Gloucestershire and East Sussex on his books. But others could follow.
“There are more and more areas that are telling us about their future. The floodgates haven’t opened, (but) the budget has made this (future) a more precarious path to navigate,” Spofforth says.
Are there enough buyers? Ed Mansel Lewis, head of viticulture at Knight Frank, is hopeful. “I work for an international company,” he says. “(But) there are currently a smaller number of companies that can buy or merge with the sellers.”
Not everyone is gloomy. Despite this year’s cool and rainy growing season, some areas still expect to produce superior quality. This includes Domaine Evremond, the partnership between the French champagne-producing Taittinger family and British fine wine distributor Hatch Mansfield. Its first vintage of high-quality sparkling wines will arrive in stores this spring.
“I have no complaints, and with a good harvest we are very happy,” said Patrick McGrath, managing director of Hatch. He believes this is due to Evremond’s location, near Chilham in Kent. “It was better further east, less humid than further west.” Unsurprisingly, he has high hopes for British wine. “I still think we’ll see more foreign brands coming in, like Jackson Family Wines.”
One of America’s largest producers of premium still wines, the Jackson family purchased 67 acres in the Crouch Valley in 2023, now considered one of the UK’s premier regions for sourcing grapes. . She hired Charlie Holland, former managing director and winemaker of Gusbourne in Kent, to produce sparkling wines.
“For the Jacksons, it’s a bit of a climate blanket,” Holland muses. “What happens in 20 years? By then, the Crouch Valley will have established itself as a prime location for growing and producing Pinot Noir and Chardonnay.
For now, start-ups must focus about how to continue in a less forgiving environment. For some, like Martyn Pollock, of Nine Oaks in Kent, this means outsourcing some of their operations. It is these subcontractors who have their finger on the pulse of the wine community.
“Even though people consider English wine expensive, it’s actually difficult to cover the costs,” he says. “The margins are quite thin. (Paying more for) national insurance contributions doesn’t help. This definitely informs our plans to hire additional staff.
Even established, fully integrated premium sparkling wine producers, such as Mark Driver of Sussex-based Rathfinny, will feel the pain.
“Change. . . (National Insurance) is going to cost us £250,000 more a year, which is a huge amount of money for us.” He uses local workers for the picking. “The cost of these people will increase by 22 percent.”
To reduce his initial capital outlay, Pollock chose to outsource wine production, using Defined Wines, one of several new companies providing services to small wineries. Even if it sacrifices some profits, it can focus on growing sales as quickly as possible.
“The people who start these wine businesses have limited expertise (in the areas of) agriculture, sales and winemaking. And sales are the biggest of the three,” said Henry Sugden, managing director of Defined Wines.
At McNeill Vineyard Management, another contractor, founder Duncan McNeill manages 500 acres for his clients, mostly in Essex. This year he is refusing new business. “I now tell potential customers to wait a bit. The problem we have is the cost of production and the price of wines.
The cost of producing premium grapes in the UK is relatively high, around £2,000 per tonne, double that on the continent for comparable grapes.
McNeill can tell something is wrong. “I know a number of producers and winemakers who would be open to offers. They are fighting for profitability.
