WSTA calls for wine tariff suspension if ‘no deal’ Brexit

The Wine and Spirit Trade Association has called for a suspension on wine tariffs for bottles imported into the UK in the event of a no deal Brexit to prevent the price of wine “sky rocketing” to an all-time high.

Currently there are no tariffs on wines imported into the UK from the EU, Chile and South Africa.

If the UK leaves the EU without a deal, tariffs on EU wines, alongside a planned duty increase on 1 February, would add an extra 20p to the price of a bottle.

The WSTA estimates that the introduction of these tariffs will cost UK wine importing businesses over £100 million a year, with the cost ultimately passed onto the consumer.

“If the UK ends up with a no-deal Brexit then wine businesses will have to cope with additional tariffs as well as another duty rise – which is highly likely to end up full square in the consumer’s lap, bumping up wine prices to an all-time high,” said Miles Beale, chief executive of the Wine and Spirit Trade Association.

“We are calling on government to clarify their tariff plans now and – in the event of a no deal Brexit – to commit temporarily to imposing no tariffs on wines for at least six months.

“This would be a pragmatic solution with any loses to the Treasury covered by not having to implement a costly new system. It also leaves intact government’s ability to remove tariffs on wine permanently – but as part of a future free trade deal.”

Such an arrangement would “massively reduce the strain on the supply chain that a no deal Brexit will inevitably bring about”, the WSTA argues, and would have minimal impact to Treasury coffers, with any losses cancelled out by the potential costs of introducing a system for collection of tariffs.

STOCKPILING

The uncertainty surrounding future tariffs has led to many producers stockpiling wine to ensure supply post Brexit.

UK wine merchant The Wine Society has appointed an external warehousing firm to store the additional stock it has brought in in response to the challenges of Brexit and an increase in its membership.

Speaking to the drinks business, The Wine Society’s head of buying Pierre Mansour said the company had brought forward an extra 60,000 cases of wines to gives the society “extra breathing room” and to act as a buffer before and after the 29 March Brexit deadline.

Meanwhile specialist wine retailer Majestic has said it is stockpiling around £5 – £8m worth of booze in the run up to Brexit as it plans for “tough times” in the UK. Group chief financial officer James Crawford said the additional inventory would be on top of its normal level and would be brought in shortly before the end of the financial year to mitigate any disruption to the supply chain in the wake of Brexit.

Elsewhere, Direct Wines is bringing in an additional two  million bottles, about a 40% increase, on their usual stock, while Bibendum PLB (as part of C&C) say they have developed a “robust Brexit plan” which will see them ordering “significant” extra wine to have ready in stock.

The WSTA has been advising members for over a year that they should increase their stock by 20% as a starting point in case of a no deal Brexit.

The WSTA has also warned that a no deal Brexit would mean the loss of access to the EU’s Excise Movement Control System (EMCS) which tracks alcohol coming in and going out of the country documenting consignments electronically.

EMCS allows alcohol to and from the EU to be moved on with no extra checks. Without it ports are likely to “descend into chaos”, says the WSTA.

Last year the WSTA launched its #NoToNoDeal Campaign which sets out why passing a deal with the EU is so crucial to the prospects of the UK’s world leading wine and spirit industry.

For more on the campaign click here.