Turner Capital Group is delighted to announce the publication of our UK Wine Industry Report 2024. The data is striking and paints a clear picture of the industry's financial landscape, as it continues its rapid growth trajectory. Our benchmarking analysis assesses the top players in the industry, using key financial metrics covering profitability, liquidity and leverage. There has also been several landmark acquisitions in the space, which has set the stage for future M&A activity as we predict further consolidation.
Our analysis reveals that the English wine industry is at the forefront of rapid growth and expansion. Between 2019 – 2022, total sales of English wine grew at an impressive 13.3% compound annual growth rate (CAGR), and current levels of wine production in the United Kingdom are expected to double within the next ten years from 2022 to 2032.
Chardonnay and Pinot Noir grape plantings continue to lead the way in 2023 in terms of volume of wine produced, with most of the production concentrated in Kent and Sussex. Most notably, the sparkling wine category has performed particularly well, which contributed to two-thirds of wine sold throughout the entire United Kingdom. The largest importers of English wine between 2021 and 2022 included Norway, USA, and Canada.
Findings also reveal that the English wine market benefits from industry tailwinds, such as climate change, which are positively affecting growing conditions in the United Kingdom. By 2040, average UK temperatures are expected to rise between 0.5° and 2° Celsius, which will expand the area of suitability for sparkling wine production. The warmer climate will also contribute to more reliable grape yields and quality.
Although the English wine industry has only recently piqued the interest of global media critics who have praised English wine’s evolving taste and reputation, many established vineyards already have a long history of excellence. This media attention has helped boost sales, allowing English wine producers to competitively price bottles typically above £20 per bottle. HMRC cites wine as the least price-elastic type of alcohol overall in the United Kingdom, allowing further price appreciation to be matched with relatively consistent demand over time.
These market conditions have prompted a growing number of English vineyards to enter the industry. Results from our benchmarking analysis among top UK wine producers show that these businesses operate at an approximate 50% gross margin, with the major challenge being profitability due to high operating expenses. Liquidity also remains a major hurdle, with most vineyards having insufficient liquid assets to cover short-term obligations, and approximately a third of total assets in these businesses are tied up in wine stocks. These liquidity issues have encouraged most vineyards to finance operations and raise capital through shareholder equity, rather than debt.
Despite these challenges, English wine continues to expand as many vineyards have recorded a bumper harvest in 2023. Increasing wine production continues to drive total assets. More detailed information on financial ratios and data, shareholders, and revenue split for ten prominent UK wine producers could be found within the report. Wine portfolios of each producer are also included, as well as a company overview and a full breakdown of key management.
Amidst profitability issues and a growing sector, it is no surprise to notice a pick-up in inorganic growth through consolidation. Our report includes a thorough analysis of recent precedent transactions, including Berry Bros. & Rudd’s and Symington Wine Estate’s £22.3m acquisition of Hambledon Vineyard in November 2023, London Cru’s acquisition of Foxhole Vineyard in June 2023, Sugrue South Down’s acquisition of Bee Tree Vineyard in May 2023, among others. A full commentary on each case study is provided, offering a transaction overview, the strategic rationale of the acquisition, and management commentary.
To celebrate the launch of our report, we are offering 20% off for a limited time only using code TCGSAVE20 at checkout. You can access the report using the link above, and a complimentary sample report is also available to download.
Read our UK Wine Industry Report 2024 now to gain a comprehensive overview of commercial and financial considerations of the UK wine market, top producers in the sector, and case studies of prominent M&A transactions in the space.
コメント