Winemaker Faces Heavy Competition – Why Your Favourite Wine May Get a Price Hike

UK winemaker Chapel Down faces slower demand with consumers switching to cheaper wine brands. With a £32 million winery plan scrapped, poor weather and household substitution have hit Chapel Down, with the winery likely to suffer losses next year.

With tougher supermarket alternatives, it is evident that Chapel Down’s sparkling wine sales fell in 2024 compared to 2023. A poorer harvest has forced the winery to either increase prices or take major losses in its vineyard.

What Are the Economics Behind This?

The economics behind this is very simple. Poorer harvest results in fewer raw ingredients, acting as a production constraint. This leads to higher supplier prices since Chapel Dawn will need to increase prices to offset the lower wine quantity.

If households start to substitute for cheaper brands, this means Chapel Dawn will need to respond by lowering prices to appease demand. But this reduces profits for the business, resulting in potential downsizing. This may have led to the decision to scrap expansion for Chapel Down.

For households, healthy competition leads to better product selection and competitive prices. Several winemakers are facing a flood of cheaper wine alternatives. Whilst the budget could be partially blamed, it illustrates the importance of diversification in winemaking. The biggest issue for Chapel Down is its loss of competitiveness in the production chain. With most of its vineyards in losses, it will be a difficult hill for Chapel to climb.