It’s the $64,000 question. And one I get asked on a regular basis: “Will wine prices increase because of Brexit?”
The simple answer is yes, it probably will! The more difficult questions to answer are by how much? And, can increases be attributed solely to Brexit or are other factors at play?
And before dear readers my words are quickly attributed to what is commonly known as “project fear”, it is worth bearing in mind that average prices have already seen significant increases since the referendum so it is a fact that the turmoil of Brexit has caused wine prices to increase. Prices have or will likely increase for imported goods across the board to a certain extent. What is difficult to pinpoint is which goods are likely to be hit hardest.
What we do know so far is an average bottle of wine has seen an increase of around 30p since June 2016. Some of that can be attributed of course to the Chancellor of the Exchequer and increases in duty, inflation as well will always play a part as it does in all goods but that doesn’t account for the entire 30p increase, so other factors do have an effect, the biggest player currently being our old pal Brexit.
The cost of imports from EU countries will depend very much on whatever agreement is finally signed between the UK and EU. Remember, the ‘deal’ on the table is only the Withdrawl Agreement, it on its own doesn’t sort anything, there is so much more to be bashed out before a trade agreement is struck.
If a deal is agreed that doesn’t apply import tariffs specifically to wine then we could be in a much better place than if tariffs are applied. In very simple terms whatever agreement we end up with it is very unlikely to be exactly the same as currently exists so it could mean that will add steps or processes to the current wine supply chain and obviously any additional work required will always add cost. I don’t see a situation where the supply chain will get better than it is now but we live in strange times.
The interesting developments could very well exist with trade deals struck outside of the EU once we have left. That is not to say it will be wholly positive, it’s best not to believe the hype! It is impossible to say how long striking trade deals with New World wine-producing countries could take. It could be many years.
However, it’s not all doom. One positive that could come out of the whole Brexit debacle could be a boost to the UK wine industry. Let us not forget we do make some great wine in the UK. If European wine prices begin to rise and trade deals are few and far between will people start to turn to UK based producers much more than they do now? It is a possibility, the kicker though, is that UK wine prices will need to come down to meet the shortfall currently filled by imported wine. If of course sales of imported wine rise sharply then that might be enough to start reducing prices and make a bottle of UK produced wine a more attractive option for everyone.
I am no expert in either international trade, politics or global economics so I can’t really offer any startling insight into what is actually going to happen. These are simply the thoughts of a small business owner who like loads of other small business owners, whose business relies on EU imports is very worried about what this whole Brexit mess is going to do to his business.
For now, we are all going to have to continue to ride the Brexit rollercoaster until it comes to a complete stop. There is no doubt there will be change ahead, the question for us all to muse over is will it be good or bad for our beloved bottle of wine? I think it is likely that certainly in the short-term prices will rise but by how much is extremely difficult to predict.
Written by Dean Spencer – Director – Inspiring Wines
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