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WSTA: Wine industry needs to ‘buckle up’ for a long election year

21 May 2024 By Arabella Mileham

The UK wine industry needs to “buckle up” and “be prepared for the unexpected”, according to WSTA chief executive Miles Beale, as he outlined the priorities and challenges facing the UK wine industry in a pivotal election year.

Speaking at the London Wine Fair this morning for the annual State of the Industry briefing, Beale noted that the last four years had been “something of a mixed bag”, with some good outcomes, some moderately good outcomes “and a number of outcomes that frankly threaten the very economic sustainability of many UK wine businesses.”

In general, businesses need to plan for longer deliveries, which means holding more stock, thereby tying up cash flow, while the use of groupage – the bringing together of many small shipments into one load – has been greatly reduced.

The good outcomes included the removal of the “infamous” VI-1 import certificates for wine form and revising inherited EU rules to make them better suited to the UK market. The third and final last tranche of reforms was currently being analysed by government with the aim to introduce the proposed changes before the next election.

Beale said that although the WSTA “by and large we support the reforms set out by the Government, many of which we have been calling for since 2016”, more work is needed on developing detailed labelling guidance. “I hope we will be able to sit down with Government over the coming weeks and work together on producing guidance which protects consumers, businesses and the category as a whole,” he said.

The bad and the ugly

By far the Westminster Government’s most significant failure was in the review of UK Alcohol Excise Duty, Beale argued, which had failed to level the playing field, instead reinforcing existing “market distortions” that favour beer and cider over wine and spirits or take into account the complexity of the sector.

The easement applies duty on wines between 11.5-14.5% abv at one rate per bottle, based on the duty payable on a wine at 12.5% abv. Over 85% wines on the UK market fall within this band and so it is vital that this temporary easement is made permanent. Lose it on 1 February 2025 and on 2 February that one payment of £2.67 will become one of 30 possible different payments per bottle, the WSTA pointed out.

With around 100,000 different wines currently available on the UK market (not counting the wines held in reserves) – “it is utter madness,” that businesses will have to record for excise purposes the strength of each wine they hold and then calculate the duty on each and every SKU, a process he said was “anti-business, nanny statist [and] un-Conservative.”

With the current government having “shut the door in the face of the wine industry,” over this issues, he said it was crucial that the next Government recognised “and valued” the economic importance of the UK’s wine industry, which is worth around £35 billion per year in economic activity, contributing £8.9 billion in total GVA to the UK economy. Over half of this (51.5%) comes from the on-trade and accounts for almost 200,000 jobs across the supply chain.

The UK is, he noted, the second largest importer of wine by volume and value, importing the equivalent of over 1.6 billion bottles of wine in 2023, a “significant proportion of which” (440 million litres) is imported in bulk and bottled in the UK.

“That’s more wine bottled in the UK in 2023 than the annual production of Bordeaux,” he pointed out. “It should not be in the interest of any Government to stifle economic growth and the creation of jobs.”

However, he cautioned that industry needed to be careful about its use its voice, and ensure that there was strong evidence to support its position.

“While it’s Government’s choice WHETHER to listen and decide IF it should act, I would argue that a united industry is harder to ignore and it’s a far better plan for government to engage with industry than to face the inevitable ‘we told you so’s’ when that voice is ignored,” he said.

In addition to the immediate task to make duty easement permanent and a longer term goal of finding a fairer UK’s excise regime, the WSTA is lobbying for a meaningful review of business rates (“Hospitality businesses need more than draught duty relief – they need meaningful support if the are to survive”); an urgent but simple reform to the current system of Packaging Recycling Notes (PRNs); and improving the quality of glass sorting and separation in the UK before it can be considered for export, while demonstrating to an incoming Government that “we are a socially responsible and socially sustainable industry.”

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