Drinks trade reacts to UK’s decision to leave EU
As the UK wakes up to the news that it will be leaving the European Union, the drinks trade has reacted with calm determination, despite many key figures having publicly thrown their support behind the remain campaign.
The leave campaign clinched the vote by 51.9% to remain’s 48.1%, prompting the swift resignation of David Cameron as Prime Minster and causing the value of the pound to plummet.
Yesterday, prior to the vote, Majestic boss Rowan Gormley warned that exiting the EU could cause the price of wine, along with all imported goods into the UK, to increase.
“If a Brexit does happen and that results in the sustained fall in value of the pound, all imported products will have to go up in cost over time and wine will be no exception to that,” Gormley said. While all UK retailers are likely to be effected equally, putting all on a level playing field, Gormley said higher prices would not help the market to grow.
Price of wine “likely” to rise
Jay Wright, CEO of Virgin Wines, has also predicted that the price of wine is “likely” to rise, stating this morning that the “EU won’t feel as strong without the UK”.
Both the WSTA and Scotch Whisky Association had also campaigned in support of remaining inside the European Union. Following a survey of the WSTA’s 300 members, 90% said they wanted to remain in the EU, with just 2% backing ‘Brexit’ and 8%, at that time, undecided.
The Scotch Whisky Association’ (SWA) David Frost meanwhile said that leaving the EU could put the industry’s £1 billion pounds worth of exports and the 40,000 jobs that it supports at risk, stating that British producers were likely to face bureaucratic barriers when trading with Europe if they left the union.
This morning, Frost reacted with determination stating that there were now “serious issues to resolve” but that “all must now get behind the government as it faces the challenges, and the opportunities, this decision brings”.
Similarly, Miles Beale, chief executive of the WSTA, had raised concerns about a Brexit prior to this morning’s result, previously stating that it could stunt the growth of the UK’s burgeoning gin industry.
This morning Beale said the WSTA would do “everything it can to ensure that the UK’s wine and spirit industry has a powerful voice”, within the European and international market.
Pound at same level now as in March
Within the world of fine wine, a spike in investment was seen overnight, according to Justin Gibbs, co-director at Liv-ex.
“Overnight, when the pound got slaughtered, we saw a surge in dollar and euro based buyers”, he told the drinks business, adding: “this morning a rather lovely calm has emerged. It feels like business as usual”.
He also said that the bid to offer ratio on Liv-ex had been declining in the run up to the referendum dipping below 1, but that this morning, on the back of the night’s trade, it had climbed back up to 1.5 and was still going.
In terms of currency Gibbs made the point that the pound was now at the same level as it was in March.
“It feels dramatic, but merchants, traders and everyone has been through currency volatility before and they get on with it”, said Gibbs. “The concern now is what happens to the Euro”.
Diageo, the world’s largest maker of Scotch whisky, had also expressed support for the European Union with its chief executive, Ivan Menezes, stating his belief that the “EU’s clout in international trade helps to open up new markets with agreements favourable to the UK, reducing tariffs and resolving trade disputes”.
One of the few figures within the trade to publicly back the leave campaign was Tim Martin, the founder of UK pub chain Wetherspoon, who this morning said the decision would “enhance freedom and security” and that anxiety over the economic effects of independence during the campaign had been “misplaced”.
“The UK will thrive as an independent country, making its own laws, and we will work with our good friends and neighbours in Europe and elsewhere to ensure a positive outcome for all parties”, he said.
As the UK grapples to make sense of the historic upheaval such a leave vote is likely to bring, the drinks trade has shared its views on the result.
Click through to read how key figures in the drinks industry have reacted to the UK’s decision to leave the European Union…
David Frost, chief executive of the Scotch Whisky Association
“Voters have spoken and decided that the UK should leave the European Union. All must now get behind the government as it faces the challenges, and the opportunities, this decision brings.
“The process of leaving the EU will inevitably generate significant uncertainty. Of course, we are confident Scotch Whisky will remain the pre-eminent international spirit drink. But equally, there are serious issues to resolve in areas of major importance to our industry and which require urgent attention, notably the nature of future trade arrangements with both the single market and the wider world.
“The government will now need to consult as it prepares its negotiating approach. We look forward to working closely with them on that. We urge thoughtful and serious consideration by all parties so that we can secure the best possible continued access to the EU and other export markets on which Scotch Whisky’s success has been built, whilst minimising costs and complexity.”
Miles Beale, Chief Executive of the Wine and Spirit Trade Association
“The British public have voted to leave the European Union opening a new chapter in our history. While our members felt that the wine and spirit industry was stronger in the EU, we will work to assist government in preserving our access to the Single Market, supporting British drinks exports and agreeing the best possible international free trade agreements.
“The WSTA will do everything it can to ensure that the UK’s wine and spirit industry has a powerful voice with a view to promoting the great British drinks industry’s leading position and fulfilling its huge potential in an increasingly competitive international market place.”
Brigid Simmonds, chief executive of the British Beer and Pub Association
“It is vital that the Government acts quickly to secure economic stability and protect consumer confidence.
“We will be vigilant to ensure the Brexit negotiations do not harm the competitive position of beer and pubs in Britain and our exports abroad.”
Jay Wright, Virgin Wines
“It’s been an interesting morning. [It’s likely] the price of wine will go up, I think time will tell.
“But there will also be pressure on the Euro as well, as it is susceptible to the changes. And the EU won’t feel as strong without the UK”.
Tim Martin, Wetherspoon founder and chairman
“The referendum result will enhance freedom and security. Some people will now be anxious, but concentrating on these immensely important factors will provide reassurance. Anxiety about the economic effects of independence during the campaign was misplaced.
“The UK will thrive as an independent country, making its own laws, and we will work with our good friends and neighbours in Europe and elsewhere to ensure a positive outcome for all parties. The most important factor now is to work together for our mutual benefit.
“On a practical level, from my experience of running a business, the key factor now is to avoid the appearance and the reality of rushing to ‘do a deal’ with the EU. There is plenty of time and the UK is in an immensely strong position.
“A period of calm, reflection and discussion will be beneficial”.
Patrick McGrath MW, managing director of Hatch Mansfield
“My message is simple – keep calm and carry on!! “We need to wait for the markets to calm down and not over react”.
“It is vital that we all keep calm as we need cool heads to ride these uncharted waters. We are aware that the currency markets will be volatile in the short term”.
“We respect the views of the British people in the EU referendum. As one of the UK’s leading exporters, Diageo remains committed to the long term prosperity of the Scotch whisky industry and will now work closely with our industry bodies to seek clarity on the transition process.
“It is a priority that the UK continues to benefit from open access to the EU as well as favourable international trade agreements to protect the UK’s important export industries, including Scotch whisky.”
“We are keeping calm and carrying on with our plan. We don’t think anything dramatic is going to happen in the short term so it’s business as usual.
“Until the dust settles and it becomes clear what effect Brexit has on us we won’t make any big changes and will stay focused on making us the best and only place to buy wine.”
Simon Bladon, owner of English sparkling wine Jenkyn Place
“What is the meaning of Brexit to the English and Welsh wine making industry? We shall have to wait and see, but an immediate effect, as of today with a 4% fall in the value of Sterling against the Euro, is that Champagne is 4% more expensive in Britain, and English and Welsh wines are 4% cheaper in Europe.
“Let’s also remember that no one has told the vines about Brexit. We will continue to produce world class wines, and people are still going to want to drink it”.
David Gleave MW, founder of Liberty Wines
“At Liberty Wines it is business as usual. The most immediate consequence of the referendum result is the fall in Sterling. We have forward cover to see us through the next few months. We’ll use that period to talk with our suppliers and monitor the situation. We have weathered economic uncertainty before and are confident we have the team and infrastructure in place to do so again.”
English Wine Producers
“We face a new chapter in our nation’s history and undoubtedly with that will come changes and opportunities.
“The UK wine industry remains excited and optimistic about its future and will support and work alongside the trade bodies and government to ensure we retain a strong voice as we move forward and continue to grow strongly.”
Ufi Ibrahim, CEO of the British Hospitality Association
“The EU referendum question represented a profound moment for the future of our industry. Hospitality and tourism benefits from a flourishing economy and any level of uncertainty will have an impact. The United Kingdom’s withdrawal from the European Union is the beginning of a process which could take years.”
“On Monday 27th June the British Hospitality Association is convening its members, industry and political leaders to discuss economic and political ramifications in the short term. We will be framing a plan to ensure that we have a seat at the table on all negotiations including taxation, immigration and regulation.”
“As we go through this process, the BHA will call upon every politician in this country to do all they can to guard the strong reputation that our industry has built representing a hospitable and welcoming country all around the world. Our industry is one of the key drivers of exports, prosperity and the fourth largest employer supporting 4.5 million jobs.”
Colin Valentine, chairman of the Campaign for Real Ale (CAMRA)
“It’s clearly much too early to be able to judge the likely effect of this decision on our members, and on all of those who drink traditional real ale, cider and perry.
“CAMRA has represented the interests of all real ale, cider and perry drinkers for many years, not least in campaigning for the preservation of the pubs and clubs that play such an important part in our national heritage and in the lives of communities across the UK. We work in cooperation with other consumer groups in this country and abroad, and would not anticipate that the decision to leave the EU will affect the manner in which we represent the interests of drinkers: particularly those who prefer to drink in moderation in social settings.”
Richard Balfour-Lynn, Hush Heath
“Leaving the EU is a great opportunity for the English wine industry to reduce duty and encourage more home-grown sales. It may well mean that the prices of European wines increase here, and that English wine prices come down.
“Much of our export is to the US and Japan rather than the EU, and so there is unlikely to be a huge impact when it comes to the export of our premium English wines.”
Ignacio Sánchez Recarte, secretary general of the Comité Européen des Entreprises Vins (CEEV)
“We acknowledge the British people’s decision to leave the European Union, but obviously we regret it. UK is the second biggest importer of wine in the world, both in volume and value. With EU wines representing almost 50% of these imports, there are no doubts that the UK market is of utmost importance for EU wine producers and that the British really appreciate EU wines.
“Whatever happens, United Kingdom will remain a preferential market for EU wines and we will work with our UK colleagues to built a sustainable wine trade relation in this new political framework”.
Christine LoCascio, senior vice president of international trade, US Distilled Spirits Council
“As the result of a 1994 treaty, the vast majority of spirits exports and imports between the U.S. and the EU have entered both markets duty-free. The UK’s decision certainly generates significant uncertainty. However, given the shared interest in spirits trade across the Atlantic, the Council looks forward to working with the U.S. and UK governments and others to ensure continued duty-free access for U.S. spirits to the UK.”
In 2015, US exports to the UK reached almost $231 million. Of that 88.5% was American Whiskey, according to the Distilled Spirits Council. UK spirits imports into the US were valued at $1.55 billion in the same year. Of this, approximately 74% was Scotch whisky.
Rupert Berkmann, CEO, Berkmann Wine Cellars
“Aside from carefully monitoring the volatility in the international currency markets, it remains business as usual at Berkmann Wine Cellars. We have very strong links with our partners and suppliers in Europe. Many of these relationships have existed since before the UK entered the European Union and they will continue long after the dust has settled on this decision.
It remains to be seen what the long term effects of the ‘Leave’ vote will be on the UK’s economy, but as a business, we are in a strong position going forward.”