Brexit and the UK wine market: did 2017 predictions hold up?
When a 2017 Cambridge study on Brexit’s impact on the UK wine market was published, it predicted economic headwinds, currency devaluation and a downward spiral in domestic wine consumption. Seven years on, with fresh reports from the Wine & Spirit Trade Association (WSTA) and the International Organisation of Vine and Wine (OIV), it’s time to see how well those predictions aged.
The Cambridge model projected a decline in UK wine consumption due to sluggish economic growth and a weaker pound making imports more expensive. The latest WSTA report confirms that wine consumption has indeed dipped, but the culprit appears to be not just Brexit but also relentless tax hikes. In 2022, the UK wine and spirits industry contributed £76.3 billion in total turnover, with a significant chunk of that going straight to the Treasury.
Meanwhile, the OIV’s 2024 report paints a grim picture of global wine trends: wine production is down 2% from 2023, marking the lowest global output since 1961. Europe has been particularly hard hit, with climate change battering vineyards across France and Spain, making imports even more costly for British buyers.
The Brexit tax on imports
The 2017 study suggested that tariffs would have only a minor effect on the overall wine market, compared to the far greater impact of a weaker pound and declining incomes. In reality, this has proven accurate. UK wine imports are still thriving but at a premium. The WSTA report revealed that 39% of the industry’s turnover now comes from wholesalers, importers, and distributors, reflecting the ongoing importance of the UK as a global wine hub.
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However, the predictions of a shift in sourcing post-Brexit have not entirely played out as expected. The study foresaw a rise in imports from non-EU wine producers, such as Australia, South Africa, and Chile, as European wines became relatively more expensive. Yet, the OIV’s data shows that Italy remains the UK’s largest supplier — and rather than expanding its footprint, Australia’s wine exports have faced headwinds, exacerbated by lower production.
The British wine renaissance: a silver lining?
One of the more optimistic projections of the 2017 study was that Brexit could stimulate domestic wine production, as a weaker pound made English sparkling wine more competitive. While UK wine production is still a drop in the proverbial ocean, English wineries have indeed gained traction, particularly in sparkling wine. However, even this growth is tempered by labour shortages and climate uncertainty.
The 2017 study was right in identifying currency and income effects as the major disruptors, rather than tariffs alone. Meanwhile, UK consumers continue to foot the bill, both literally and figuratively, as wine becomes yet another casualty of Britain’s self-inflicted economic turbulence.
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