Fine wine prices could rise ‘across the board’ if the UK votes to leave the European Union today, according to one leading wine merchant.
Gary Boom, managing director of BI, said he was wary of making bold predictions given the unprecedented nature of the Brexit vote, but added: ‘We can say that the uncertainty associated with a leave vote would likely result in further volatility, which is generally unwelcome for any market.
‘[Sterling] has been weakening [against the euro] in the lead-up to the vote and it seems probable that it would continue to fall if we vote leave; this would result in price rises across the board as the cost of replacement stock would immediately rise.’
However, the picture for an international business such as BI is complex: sterling’s weakness has boosted the purchasing power of non-UK markets, said Boom.
‘In essence, it’s been cheaper for our Asia/US/EU customers to buy from the UK than elsewhere. With a remain vote, we would expect a reversal of this as GBP strengthens.’
‘In contrast, a leave vote would see an acceleration of higher prices for replacement stock as GBP would likely fall markedly. That said, if the economic community are to be believed, a leave vote would be accompanied by a material negative macro shock that would do no favours to both local and regional economic activity.’
Mike Laing, managing director of Armit, said the uncertainty regarding Brexit was ‘certainly not helping’ the 2015 Bordeaux en primeur campaign, adding: ‘I am sure there are plenty of customers who are happy to take the risk of waiting to see where things settle post-Brexit before committing funds.’
However, Boom said there was no suggestion that BI’s customers were planning to wait until after 23 June to make en primeur purchases.
Merchants are somewhat less fearful of trade barriers being erected in the event of a vote to leave the EU, with Boom claiming it was ‘unlikely’ that European wine-producing countries would impose additional tariffs, given the significance of the UK market.
Will Hargrove, head of fine wine at Corney & Barrow, said he had no real short-term fears. ‘Things will have to continue – it can’t change overnight,’ he said. ‘In the longer term, we will have to see. The UK has the good position of being a strong market for almost all European wine producers.’
Laing said: ‘One can only hope that everyone will desire as little disruption as possible, given the reciprocal importance of the trade, but there is absolutely no guarantee of this, and that definitely adds to the uncertainty.’
The UK vote is already hitting exchange rates...