Price of wine will rise as value of pounds drops 15%

Wine imported into the UK from EU countries is expected to increase by as much as 29p a bottle due to the continued devaluation of the pound, the Wine and Spirits Trade Association (WSTA) has warned.

This week the pound fell to a six-year low against the Euro, falling to €1.10 for the first time since March 2010.

This week the value of the pound fell to a six-year low against the Euro, falling to €1.10 for the first time since March 2010.

A direct result of Brexit, the WSTA has estimated that should the value of the pound fail to rally, the average cost of a bottle of wine coming into the UK from the EU is likely to increase by 29 pence, and by 22 pence for bottles imported from outside of the EU.

This is if retailers choose to pass on rising costs to the consumer, which is likely given increasing commercial pressures. Currently, 99% of the £1.8 million worth of bottles of wine drunk in the UK are imported, meaning that the vast majority of wines will be impacted.

“It is not well understood that the UK is the global hub of the international wine trade”, explains Patrick McGrath, managing director of UK wine importers Hatch Mansfield.

“The fall in the value of Sterling is having a serious and immediate impact on importers. While currency fluctuations are an accepted risk for importers, three months on there appears to be little prospect of a return to pre-Referendum values.

“The importers are having to meet the increased costs, which is already having a significant impact on profitability. In the immediate aftermath of the referendum we were covered forward for foreign currency. However this “cushion” has now run out. This will mean that we will be forced to increase our selling prices.”

The WSTA predicts that because of the 15% devaluation of the Sterling’s value since 23 June, the cost of importing EU wine into the UK could go up £225m per annum, and by £188m per annum for wine imported from outside of the EU.

This is expected to cost the industry £413m in total – the equivalent to a 10% hike in total alcohol duty – much of which will be absorbed by wine businesses but also passed onto the consumer.

“Grave concern to the wine industry”

Naked Wines has already said that it would be raising the price of half of its wines by 5% next month due to the falling value of the pound. Rather than ask suppliers to lower their prices, Naked Wines is raising the price of some of its most popular wines by around 50p.

“Winemakers supplying the UK need your support now more than ever. We’re not the type of business to start a war with suppliers over price. Nor are we going to compromise on quality to hit margins,” an email sent to its Angels explaining the planned rise read.

Naked’s parent company, Majestic Wines, has no plans to raise the price of its wines, having been buffered due to stocking up on euros before the Brexit vote.

“We should be under no illusions that wine prices are likely to increase, which in the current climate could lead to a bottle of wine going up by 29p”, warned chief executive of the WSTA, Miles Beale.

“This is of grave concern to the wine industry and it is vital that Government come out in support of the trade which generates £17.3bn in economic activity. We are just weeks away from the autumn statement. Any increase in duty, on top of the post-Brexit Sterling devaluation, would have dire consequences on Britain’s wine trade.

“It is not only consumers who will feel the impact of price rises, but also by more than a quarter of million employees in the world leading UK wine industry.”