UK-based Chapel Down has announced the disposal of its Curious Drinks business and assets to a NewCo established by private equity firm Risk Capital Partners (RCP).

Subject to providing HM Revenue & Customs (HMRC) licences to RCP, Chapel Down intends to place Curious Drinks (Curious) into administration, after which RCP will acquire the business and assets from the administrators.

RCP will acquire Curious Drinks business and assets including Curious Beer and Cider brands and the Curious Brewery and restaurant.

This decision comes after a strategic review by the Chapel Down board undertaken as a result of the impacts of the Covid-19 pandemic on the hospitality industry.

With 90% of its beer sold to the on-trade, Curious Drinks has been hugely affected by the closure of pubs, bars, restaurants and hotels, and other hospitality venues and events due to lockdowns imposed by the UK Government to contain the spread of Covid-19.

However, Chapel Down’s wine and spirit business recorded an overall volume growth of 38% in 2020, due to increased focus and sales to supermarkets and other off-premise retailers, and growing direct sales on-line. The sales growth of the wine and spirits business have compensated for the loss of sales through the on-trade channel.

There will be no redundancies as part of the disposal, and the effect of the disposal is to remove the Curious business from the Chapel Down Group and with it, the attendant net debt in Curious.

This will cut down Chapel Down’s unaudited net debt from £7.2m to £0.1m with £4.6m cash on a proforma basis at 31 December.

Chapel Down Group CEO Frazer Thompson 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.”