Just a few years ago, Kent’s wine-making industry was toasting its own success.

Fuelled by our changing climate, sparkling and still wines were being grown on an ever-increasing number of vineyards in the county.

They were gaining rave reviews globally, winning awards and becoming a key part of the tourism industry, with investment flowing.

But the picture has shifted over the last two years, with share prices plummeting and a rising surplus in bottles produced versus those sold.

Plus, the sharp increase in energy costs, production and storage of those extra bottles, disappointing summers and a squeeze of consumer spending have decimated profit margins.

After all, if you’re watching your pennies, do you opt for the £7.50 bottle of Prosecco or the £22 Chapel Down Brut? The quality of the latter will almost certainly be more palatable, but the price difference is hard to ignore.

All of which poses the question: has the fizz gone out of Kent’s wine industry?

The situation is compounded by news emerging this month that global wine sales have slumped to their lowest in 60 years.

The International Vine and Wine Organisation say this is down to “an intersection of economic and geopolitical factors generating inflation and creating uncertainty”, as well as evolving preferences, social habits and generational changes.

Stephen Skelton is a Master of Wine and is perhaps best known as the man who planted the very first vines on what would become English wine’s best-known name - Chapel Down.

He explains: “The cost-of-living crisis, the 25% cumulative inflation since 2018, the rise in the price of energy caused by the war in Ukraine and its knock-on effects, plus rising interest rates have all raised the cost of wine production, nibbling away at margins and have reduced net income as never before.

“Currently, what is being harvested and bottled is around three to four times the amount of wine being sold. Taken together, these factors paint a somewhat negative picture: too much wine, not enough sales and cash getting tighter.”

There have been some issues behind the scenes too at some of Kent’s major wine producers.

Gusbourne, based in Appledore, opted to delist from the stock market in March - a decision rarely seen as a sign of investor confidence - with shareholders backing a decision to return to private ownership.

Explaining its decision, the company said the UK trade market “continues to be extremely challenging” with the economy stalling and business confidence remaining low, whilst the tax burden on UK businesses continues to rise.

Gusbourne has seen a 13% drop in revenues in 2023 and in 2024 its revenue growth was described as “relatively flat” and its cash position as “tight”.

Ultimately, the company felt the costs involved in remaining on the stock market outweighed the benefits.

Meanwhile, Chapel Down, based in Tenterden and the undisputed king of English wine - with around 10% of all vineyards - has also painted a less than stellar picture in recent years.

Last September it confirned pre-tax profits for the first six months of the year were down an eye-watering 98%. Its share price tumbled and last June the winemaker revealed it was “considering a sale” in order to get the funds needed to fuel ambitious growth plans. By October, those plans were scrapped.

In addition, its chief executive and chief financial officer both left the company and were replaced.

The most recent financial figures for 2024, published earlier this month, revealed that net sales revenues dipped by 5% to £16.4m from £17.2m the year before. While its EBITDA (earnings before interest, tax, depreciation, and amortisation) was down 58% to £2.4m. Debts, meanwhile, increased 641% - rocketing from £1.2m in 2023 to £9.1m in 2024.

Despite this seemingly rather gloomy picture, Chapel Down’s new CEO James Pennefather is not downcast.

“In terms of the debt, it has risen year-on-year,” he says, continuing: “We are a growing business, set to return to profitability this year and the board is comfortable with the current debt profile.

“In terms of our profits, obviously we've reported a loss in 2024, but there were contributors including about £1m worth of one-offs in the off-trade channel [bottles sold in shops], which was due to a significant reduction in stock held by retailers and the decision to exit spirits.”

The company decided to end producing a line of spirits at the end of last year to focus purely on its winemaking.

Chapel Down also points to investment in its vineyards - it now has around 1,000 acres across the South east - as capital expenditure which should deliver returns in the long run.

But, still, question marks persist over an industry which has not been shy in trumpeting its successes in recent years.

And while there is no doubt share prices don’t always paint a full picture of performance, they do suggest not all is well.

Russ Mould is investment director at investment platform AJ Bell. He explained; “Wine is a capital-intensive business, where a lot of cash is tied up in the vineyards and also bottled stock, so anyone looking at getting involved in the wine industry directly needs to be patient and investors in it need to think the same way.

“It can take time to build a reputation and a brand. Wine drinkers tend not to be as loyal to brands as, say, consumers of spirits or beer. They may ask for a certain type of wine – say sauvignon blanc or pinot grigio – but they’re unlikely to walk into a bar and request a specific brand of wine from a certain producer.

“This contrasts sharply with spirits or beer. They may well do so at the off-licence or via a website but there is still no shortage of competition in such arenas

“Getting going can be a time-consuming and expensive process, and capital can also be a constraint on future growth, as Chapel Down’s experiences suggest.

“The fickle British weather can be a challenge, too, even if the terroir and climate of Kent and other prime growing regions are suitable for particular grapes, so this adds another layer of unpredictability.

“All in all, this is an area suited to investors with a high tolerance for risk, and the ability and willingness to suffer losses in pursuit of profits, even if the reputation of English wines continues to flourish.

“Shares in other leading alcohol producers such as Diageo, the owner of Captain Morgan, Smirnoff and Guinness, are under pressure too as consumption returns to more normal levels after the spike during Covid and the lockdowns.

“Consumers trade down through brands as their pockets are squeezed by inflation and some just drink less.

“It remains to be seen whether future generations consume as much wine and booze as their parents, too, so there are a lot of different issues to consider when an investor researches the companies and tries to determine whether they think the shares represent good value or not.”

Master of Wine Stephen Skelton also agrees panic buttons shouldn’t be pressed just yet.

He explained: “I believe that whilst we are going through a period where things will be tight, we have been here before.

“Between 1993 and 2003 both the planted area and the number of vineyards fell by 27%. Several large vineyards - as well as many smaller ones - went under as they couldn’t sell their wine at anything approaching a profitable price, their stock expanded and cash-flow dried up.

“I believe we are facing a difficult period for winegrowing in England but firmly believe the positives outweigh the negatives.

“We need to get stocks down to a supportable level and this can only come about by increased sales, probably at lower prices than today’s.

“The rate of planting will probably also slow down as grape prices ease and fall to below the cost of production.”