English Wines Group, owner of Chapel Down Winery, has raised GBP1.1m (US$1.8m) to increase grape supply and improve equipment on the back of growing demand for English wines.

The group said yesterday (16 July) that it has raised the funding via conditional placing of 1.1m loan notes at GBP1 per note.

Net proceeds will be used to fund the working capital requirements, such as the need to increase grape supply and expand processing capacity, as well as invest in developing exports and marketing.

Each loan note can be converted into ten shares in the company between July 2012 and July 2015, the firm said. Company directors Paul Brett and Nigel Wray bought nearly two thirds of the notes, giving them 23% and 35% stakes in the firm respectively, following conversion.

UK wine production could rise from around 200,000 bottles per year to as much as 2m bottles by 2015, Stephen Skelton MW, author of the UK Vineyards Guide, told just-drinks last month.

Vineyard plantings in the UK rose by 45% between 2004 and 2008, to more than 1,100 hectares, according to Government figures released in June.

UK retailer Waitrose, which has this year planted its own vineyard of 4ha, told just-drinks  that sales of UK wine rose by 18% at its stores in 2008.