Latest figures from the Wine and Spirit Trade Association reveal – that if passed on – the average bottle of wine coming from the EU would go up 29p and by 22p for wine from outside of the EU.
99% of the 1.8 billion bottles of wine drunk in the UK are imported, meaning that any added tariffs will have a punishing effect.
Managing Director of UK wine importers, Hatch Mansfield, Patrick McGrath warned:
“It is not well understood that the UK is the global hub of the international wine trade.
“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.”
WSTA analysis shows how the Sterling devaluation could financially impact on the UK wine industry.
As a result of the 15% drop in Sterling’s value since 23rd June, the cost of importing EU wine could go up £225m per annum.
The cost of importing wine from outside the EU could up by £188m per annum.
A year like this would cost the industry £413m in total – the equivalent to a 10% hike in total alcohol duty – some of this may get passed on to the consumer, but some will probably need to be absorbed by wine businesses.
Nick Clegg, the Lib Dems EU spokesman, has published a food and drink Brexit impact report warning that a hard Brexit will put imported beef, cheese and wine prices on a “cliff edge”.
The wine industry is bracing itself for a tough time ahead and asks for Government support by way of not raising duty and inflicting more damage at the next budget.
Chief Executive of the Wine and Spirit Trade Association, Miles Beale, said:
“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.
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.”
The UK wine industry directly employs 170,000 people and further 100,000 through its supply chain.
The UK being the 2nd largest trader by volume (behind Germany) and by value (behind USA), cementing its role as a key international player.
Industry bosses have sent out a warning that we risk losing our number one status as a world wine trading country, which will directly damage the UK economy.
The UK wine and spirits industry in 2015 contributed £15.6bn to the Treasury.
Wine has become the country’s favourite choice of alcoholic drink, with 71% of adults drinking wine, the equivalent of 39m people. It is the nation’s love of wine which is helping to drive more food, family friendly pubs and bars.