Ongoing Brexit Turmoil is Rattling the UK Wine Trade
British wine merchants are facing new regulations and it could mean a price hike for consumers. Decanter contributor Chris Mercer has the scoop.
By Chris Mercer
Brexit turbulence has hit the UK wine trade in early 2021, amid warnings that extra costs may mean price rises for drinkers.
A last-minute Brexit deal on Christmas Eve 2020 didn’t spare the UK wine trade from a deluge of extra paperwork triggered by Britain leaving the EU single market and customs union after December 31.
There are plenty of wine-related issues linked to Brexit, from duty-free shopping and prospective free trade deals to UK wineries requiring EU-made equipment.
Yet with the EU supplying 55% of the UK’s wine imports, tension has threatened to boil over.
“For those of us who deal with EU wines, our administrative burden has increased noticeably since January 1, 2021,” said a letter signed by around 50 companies claiming to “account for 70% of the 1.34 billion bottles sold annually in the UK.”
Battle Over Import Papers
Tight profit margins make wine particularly sensitive to added costs, they wrote to Victoria Prentis MP, under-secretary of state for food.
They took aim at plans to require paper import certificates for EU wines. “This will make wines more expensive for the consumer,” they said, adding smaller European wineries might not bother sending wines across the English Channel at all.
In brief, the Brexit deal ensured EU wine imports don’t need so-called VI-1 import certificates, which would have cost the industry about $97m (£70m), according to the UK’s Wine & Spirit Trade Association.
Yet, simplified certificates are still set to be introduced on July 1, 2021.
Are These Just Teething Problems?
“The teething problems are not as temporary as the government would like them to be,” said Daniel Lambert, of the namesake wine importer, who helped to organize the letter above and has led a Twitter campaign on Brexit issues.
Lambert said the UK trade “isn’t going to dry up tomorrow” but equally the cost of importing EU wines has already risen. He said this could mean price rises of more than £1-a-bottle in some cases, with pressure highest on small-batch wines.
“I wouldn’t be at all surprised if you see a reduction in ranging in the next six months,” he said.
He is also concerned that bars and restaurants emerging from Covid-19 restrictions may not be fully prepared for the post-Brexit era.
Looking longer-term, there have been questions about whether Brexit will change Britain’s role as a global wine trading hub, selling stock to clients around the world.
It’s too soon, but a future bone of contention could be the requirement for bottles entering the UK to be stamped with importer labels, due in October 2022.
Technology to the Rescue?
Can tech help to smooth border crossings? Liv-ex, a global marketplace for the trade, recently launched APIs (short for ‘application programming interface’) that can automatically generate codes needed for customs paperwork, for example.
“Technology alone will not solve the UK’s problems,” said Liv-ex chairman and MD James Miles.
“The UK has the opportunity and technology to build its leadership in the international wine market…but the government is not yet taking advantage of these opportunities.”
Many believe the UK government now has a major role to play.
Jamie Ritchie, worldwide head of wine at Sotheby’s auction house, said: “The UK has an opportunity to really simplify its regulations.”
For its part, the government has said its new Customs Declaration Service will replace current systems and has highlighted the potential of future free trade agreements (FTAs).
There is the prospect of closer trading relations with non-EU wine producers, including those in California, but it’s early days.
Turning to exports, could FTAs help English and Welsh sparkling wines to find new fans abroad? “We hope so,” said Tamara Roberts, CEO of Ridgeview Wine Estate.
Yet she added exporting is more complicated for some UK wineries at present because wines would normally be sent to France to get “consolidated” with other bottles before onward shipping.
That said, Roberts also believes it is difficult to distinguish between the impact of Brexit and Covid-19 at the moment.
The UK Still Loves Wine
Michael Sager, who imports direct from around 20 wineries and is also director at Sager & Wilde wine bar and Fare Bar & Canteen in London, said there was at least some clarity on Brexit more than four years since the June 2016 referendum.
He believes it’s important to be positive in the face of numerous challenges. Plenty of Brits still love wine, after all.
The UK is “one of the most diverse wine markets in the world”, said Sager, noting demand stretches from old school Bordeaux to new-wave natural wines.
“London and the UK is also a super interesting hub for international gastronomy now.”
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