The impact of Brexit on the UK wine industry

New UK labelling laws

Unfortunately, the changes did not stop there. As of January 2024, the UK legislated new back labels for wine sold in the UK to include the postcode and name of the UK importer. The result is European wineries must print and label their UK wines separately to their European ones. For smaller volumes like ours this adds disproportionate cost and time delays as we now only label the wines destined for the UK once we get an order (if we pre label we are unable to sell the wine anywhere else). In the past we took stock from the warehouse and the pallet was ready to go the next morning. Now we have to re deploy colleagues from the vineyards to label and prepare the order, on an individual basis for the UK. If there is a pressing weather situation the order has to wait.

A burdensome new UK duty regime

And…from February 2025 the UK Government will introduce a complex duty regime that according to the Financial Times will, ” drive up prices, reduce consumer choice and tie up small businesses in red tape”. The new duty on wine will increase by increments of 2 pence for every 0.1 per cent increase in alcohol content. This means the UK wine industry is moving from a high tax regime with simple flat bands of tax, to a high tax regime with approximately 30 different bands.  This makes end market pricing harder to predict and likely to be volatile. Wine is a natural product and it is not possible to control the amount of alcohol, without breaking many other wine making laws (that would put us all in jail!). Our wines range from 11.5-12.5% in cooler years to 13.5% in a warmer years. This would add or detract around 5% to the end market price, something that retailers and restaurants hate as they target key price points in their planning.

Our sources both small and large, and regardless of political affiliation, are giving a clear message; this new regime will not be more simple for the industry (a claim the government is making) and it will cost more.  The Wine Society has said it will cost £400,000 investment in systems to accomodate the changes and another large distributor has stated they will need to add 2 full time people in logsitics and pricing, 8% of their workforce.

If it’s not broken don’t fix it

In summary, it is not just Brexit but the layering of legislation and additional cost that has neither the consumer or increased tax generation at its heart. The choice of wines for informed consumers in the UK is unparalleled. The UK government recieves over £12billion in alcohol duty a year, which is more than the entire of the EU put together. Alcohol duty has grown faster than inflation, despite flat volumes, and the industry employs over 400,000 people (according to the WSTA). As the 3rd largest importer of wine in the world the UK is also a key market for brand building and training, a place where sommeliers once flocked to broaden their exposure to wines from all over the globe. Brexit was meant to bring less red tape not more and it appears these ‘rule makers’ are unable to make other economic connections that also drives employment; that hard working distributors supply an incredible range of wines to all corners of the country and wines are a key profit driver for successful restaurants. That a strong regional gastro scene brings tourists…that Scotland and Cornwall are clear evidence of this. The list goes on….

So our view is why jepodise what appears to be a success story?  One well known contact has already stopped importing from some wineries in Europe. The economics did not make sense and high quality wineries can sell their wines in other countries for better prices. There is still time to avert from the proposed path and we know that behind all the noise there are groups of wonderful, interested customers willing to pay fair prices for good quality wine. In the mean time we will be patient and will work hard to continue to support our UK partners.  We have seen markets go up and down in many countries, things can change!