WSTA: No deal Brexit will cost wine industry £70m

Crashing out of the EU without a deal will generate more than 600,000 additional forms that will cost the wine industry £70 million, ushering in the need for thousands of individual laboratory tests on all wine imports, the WSTA has warned.

A no-deal Brexit will cost the wine industry an estimated £70 million, the WSTA has warned

The warning follows Teresa May’s revised guidelines for the progress of Brexit over the coming months.

A vote on the PM’s revised withdrawal agreement from the EU will be put to MPs on 12 March. If that fails, MPs will be offered two further votes. The first will take place on 13 March on a no deal scenario.

If that fails, MPs will vote once more on extending article 50 beyond 29 March. If that fails, the UK will leave the EU with no deal.

This morning, the WSTA has written letters to Ministers Michael Gove, Liam Fox and Philip Hammond outlining its concerns over the mounting costs facing the wine industry in the event of a no deal Brexit.

Should that happen, it says UK wine businesses will have to “jump through hoops” to import wine into the UK with the introduction of new forms and laboratory test demands that will amount to costs of £70 million for both the UK and European wine industries. 

Under the current system, as a member of the EU, the UK has access to the EU’s Excise Movement Control System (EMCS) which tracks alcohol coming in and going out of the country documenting consignments electronically. EMCS allows all alcohol categories to and from the EU to be moved on with no extra checks of costs. Currently, 55% of wine consumed in the UK is imported from the EU.

In the event of a no-deal Brexit, European wine producers will have to pay to fill out a VI-1 form to import wine into the UK, and for extra laboratory tests for every consignment of wine sent to the UK, no matter how big or small, generating an estimated 500,000 new VI-1 forms.

Likewise, any wine entering the EU from the UK will have to be accompanied by a VI-1 form, which will generate an estimated additional 150,000 forms. Each two-page form costs an estimated £20, which has to be filled out by hand. 

UK wine inspectors will find their workloads increase overnight, with every handwritten VI-1 form needing to be scrutinised and stamped before wine from Europe is allowed into the UK.

‘DROWNING IN PAPERWORK’

The WSTA estimates that it would take 12 full time wine inspectors a whole year to process the half a million new VI-1 forms expected to mount up after a no deal Brexit. This does not take into account the other work carried out by Wine Standards who currently consist of a team of six regional inspectors.

“The burden, particularly on small wine producers that often stock independent wine merchants, is likely to be too great and in some cases wine supplies from smaller vineyards into the UK are expected to dry up,” the WSTA warns.

When added to wine duty hikes, enforced by the Chancellor earlier this month, as well as the introduction of wine tariffs and rising inflation – a no deal Brexit will mean UK wine consumers will face a rise in prices.

“The additional form filling and laboratory tests required for a no deal scenario will come as a real blow to exporters and importers alike,” said Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA).

“Wine inspectors will find themselves drowning in paperwork and – unless they can double their workforce – wine consignments are going to be held up by unnecessary additional red tape. The reality is that if we leave the EU without a deal wine businesses, big and small, will be facing a catalogue of extra costs which will ultimately be passed onto the British consumer.”

A spokesperson for the SWA added: “A no-deal Brexit will lead to disruption in our exports to the EU and increased costs in other global markets.  Small and medium sized producers, as well as some companies in our supply chain, risk being worst affected.

“As both a consumer and excise good, complex changes to, for example, the labelling of Scotch Whisky and the procedures for moving consignments across Europe could be required at very short notice. The industry is investing a great deal of resources in no-deal preparedness, but there remain issues where planning is difficult because we cannot be certain of the terms under which we will be trading with Europe after 29 March.”

EMERGENCY PLANNING

The WSTA has been advising members for over a year that they should increase their stock by 20% as a starting point in case of a no deal Brexit.

Direct Wines have already brought in an additional 2 million bottles, about a 40% increase, on their usual stock, while Bibendum PLB (as part of C&C) have also ordered “significant” extra wine to have ready in stock. Majestic Wine has also said it will hold a further 1.5 million more bottles of European wine as part of emergency planning.

The WSTA has already called on the government to impose a temporary suspension on all wine tariffs until the end of 2020 in the event of a no deal, and now also to review proposed import rules in an effort to seek agreement from the EU to have continued access to EMCS.

Last year the WSTA launched its #NoToNoDeal Campaign. For more information, visit www.dontbottleit.co.uk.