Wine drinkers could be seeing red over Brexit price rises
Never mind borders or backstops - the most recent bad news to come out of Brexit has shown that the price of wine could go up.
The Journal of Wine Economics featured an industry study that says that the amount customers pay could increase by up to 25 per cent by 2025 in the event of a hard Brexit, or 11 per cent in terms of a softer Brexit.
According to a report by WSTA, the Wine and Spirit Trade Association, 99 percent of wine drunk in the UK is imported. Of this half is produced in the EU, while the remainder comes from Australia, USA, Chile, Argentina, South Africa and New Zealand.
There are concerns that if the right measures are not put in place it could stop imports from crossing the border, which has lead some retailers to stock up on bottles in advance.
The WSTA has been advising members for more than a year that they should increase their stock by 20 per cent as a starting point in case of a no deal Brexit.
Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “Since the Referendum, the WSTA has campaigned consistently for a deal with the EU that delivers frictionless trade in goods, with no additional tariffs or costs.
“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.
“Currently there are no tariffs on wines from the EU, Chile and South Africa. A no deal Brexit would result in the introduction of tariffs, estimated to cost UK wine importing businesses over £100 million a year.
“The introduction of no deal Brexit tariffs would be a double blow for wine businesses after the Chancellor elected to single out wine for a duty rise at the Autumn Budget.”
From February 1 the duty on a bottle of wine went up by 7p, but add a tariff to the duty rise and VAT and this means an average priced bottle of wine, which today costs £5.73, will cost £5.93 in the event of no deal.
This is an extra 53p a bottle more than consumers paid before the referendum result when an average priced bottle of wine was £5.40.There could be some positive benefits for British vineyards however.
It is believed that British wines will seem less expensive than its European counterparts as retailers won’t be forced to hike prices because of rate or tariffs.However, British vineyards could be hit with the lack of skilled workers from the EU and vital agricultural funding streams.
The WSTA also wants confirmation that funding that was before provided by the EU will be picked up somewhere else.
Tamara Roberts, CEO at Ridgeview in East Sussex, said: “As we prepare for Brexit, it will be critical that the government does all it can to help English wine grow and that includes continued access to funding streams.
“Complete confidence in the quality of our wines has allowed us to expand production but so has access to funding streams, some of which derive from EU structural funds.”
At the moment, while the future is uncertain as to what will happen with Brexit come March 29, it may be worthwhile buying a bottle or two extra of your favourite European tipple. Just in case.