Chapel Down Group is gearing up to dispose of its Curious Drinks business and assets.

The English wine producer said it intends to sell its beer and cider arm, comprising the Curious Beer and Cider brands and the Curious Brewery and restaurant. At present NewCo, established at the direction of the Luke Johnson-owned Risk Capital Partners (RCP) is lined up to acquire the business, subject to HMRC approval.

The decision follows a strategic review by the Board, which was undertaken as a result of the effects of the Covid-19 pandemic on the hospitality industry. The company said 90% of its beer is sold to the on-trade and therefore the Curious Drinks arm of the business has been “significantly impacted” by the closure of pubs, bars, restaurants and hotels due to the UK Government imposed lockdowns.

In contrast, Chapel Down’s wine and spirits business, with an established strong brand and more multichannel route to market, has thrived, with overall volume growth of 38% in 2020. Increased focus and sales to supermarkets and other off-premise retailers and booming direct sales online, have “more than compensated” for the loss of sales through the on-trade, the company said. In a statement it said: “This has created a significant opportunity to further grow Chapel Down and create value for shareholders.”

Frazer Thompson, chief executive of Chapel Down Group, said: “The Covid-19 pandemic has upturned the best laid plans of businesses all over the world and has required companies to respond to the crisis with flexibility and agility. In our case that involved pivoting our multichannel strategy to have a stronger focus on supermarkets and e-commerce direct sales to consumers for our wines which resulted in volume sales growth of 38% in 2020.

“Demand and respect for English wines and Chapel Down in particular, is growing all the time, and as the leading brand and business we see a significant opportunity and a very bright future for Chapel Down. We certainly won’t be abandoning the hospitality business – we love it – and will support its return vigorously with our wines and spirits.

“It has, however, been a very difficult year for the Curious Drinks business which, as a young brand with 90% of its sales to the on-trade hospitality sector, has been severely impacted by the uncertainty and frequent shuttering of that industry.

“Following a strategic review, the Board has taken the decision to focus our energy and resources on building the Chapel Down brand and business to ensure that we continue to flourish. While this has been a difficult decision, we are very pleased to have found in Risk Capital Partners an excellent home for Curious Drinks – and the Curious team – where the business will be able to fulfil its exciting growth potential. I’m delighted that we will be able to offer Curious Drinks shareholders shares in Chapel Down Group.

“Looking ahead, thanks to yet another excellent harvest in 2020 we will be able to release more wine for sale, whilst also putting aside more base wine for future growth. We look to the future with increasing confidence and will continue to drive the business for the benefit of all our stakeholders.

“I would like to take this opportunity to thank the team at Curious Drinks and the brewery, and all those customers and suppliers who have supported it over the years. I look forward to seeing its continued success in the coming years under new ownership.”

Luke Johnson, founder of Risk Capital Partners, said: “We see terrific potential in the Curious Drinks business, and we’re very excited about its future, despite the challenges of the past year. Brewing will always be a cornerstone of British culture, and the craft beer revolution has only strengthened that. Curious is a great brand made in a fabulous facility, and with our support we believe the business can be developed further. We are particularly pleased to be taking on all Curious employees, who bring with them a wealth of insight and knowledge.”

Chapel Down said there will be no redundancies as part of the disposal.