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Winemakers may shift bottling out of UK post Brexit, MPs warned

Winemakers may shift bottling out of the UK to Europe following Brexit if higher tariffs are introduced and there is more red tape, MPs have been warned.

The Houses of Parliament (Photo: Flickr)

Speaking to the Commons international trade select committee yesterday (9 January) Simon Stannard of the Wine and Spirit Trade Association (WSTA) warned that wine businesses were looking “very seriously” at their current business model in which the UK is used as a hub for their bottling operations, to see what it is going to be like post-Brexit.

“Whether or not they may be forced to move their bottling plants from the UK, we’ll have to see,” he told MPs.

He argued that being a bottling hub for wines subsequently shipped to Europe, Norway, the Ukraine and Russia not only made “good economic and environmental sense” by increasing the volume and saving carbon emissions, it also made a ” significant contribution” to the UK’s jobs and economy.

“We re-export around a quarter of the Australian wine that comes into the UK to the rest Europe, Norway, the Ukraine and Russia so  that is a significant part of the UK business economy that benefits from being able to ship in bulk.”

A no-deal Brexit would make this more complicated, he said, primarily as a result of the added bureaucracy and tariffs in exporting wine back into the EU, once we’re no longer a member.

“At the moment there’s a tariff on bulk wine coming into the EU that’s lower than bottled wine but once it’s in the EU, it can freely circulate even once it’s bottled.”

Once we are out of the EU, tariffs would revert to those imposed by the World Trade Organisation (WTO), which he noted were broadly similar (9 euros per HL to import bulk wine and 13-15 euros for bottled wine), although companies would likely have to pay the bottle rate to ship wines into the EU after bottling, even if they could claim claim processing relief.

“The costs on the individual products won’t be significant, it’s the question of the bureaucracy burden and the increase over shipping and moving the product in the short term that is the main issue,” he added.

The committee was taking evidence from the industry for its inquiry into potential free trade agreement s (FTA) with Australia and New Zealand following Brexit.

Australia is currently the largest wine exporter to the UK, and of the approximate 850 million Litres of wine brought into the UK annually,  it accounts for around 20% of the total, Stannard said, with an additional 7% of volume coming from New Zealand (and growing).

“That accounts for around 30% of all the wine imported into the UK, which is worth about £2 billion in sales out of the £11 billion total wine sales,” he said.

No to tariffs

Speaking on BBC Radio 4’s the Today Programme yesterday, WSTA chief executive Miles Beale said the government must promise not to impose tariffs and import taxes on wine from EU if there’s no deal.

“I do not think our businesses can survive unless the government suspends any tariff increases unilaterally if a no-deal Brexit happens,” he said.

Also speaking on the programme, Enotria&Coe boss Troy Christensen told Radio 4 that there was no security in getting product in from the European Union or other places following a no-deal Brexit because of concerns that queues at the ports and customs could be “significant”.

Enotria have joined the growing number of businesses stockpiling wine as part of contingency planning in the case of a hard-Brexit to ensure there is no disruption for its customers.

“I don’t know how the supply chain’s going to work, I don’t know how my tariffs, my cash flow requirements. It’s difficult that in 80 days, I’m going to be trading in an environment in which I have no idea,” he said.

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