Brexit means that it's likely to become more expensive to drink wines from Europe in the UK, says the country's leading wine trade body in the starkest warning so far from the industry.
Consumers may soon have to pay an extra 29 pence on average for a bottle of wine from the European Union if cost increases are passed on, the Wine & Spirit Trade Association (WSTA) warned.
Importers, merchants and retailers are starting to see profits squeezed by the weak pound sterling, which has stayed fragile following the Brexit vote on 23 June, it said. The weak pound might also mean price rises on some other wines from outside the EU, it said.
WSTA leaders want to persuade the government not to raise duty tax on wine in its upcoming autumn budget statement.
‘We should be under no illusions that wine prices are likely to increase,’ said the WSTA’s chief executive, Miles Beale. ‘In the current climate, [this] could lead to a bottle of wine going up by 29p.’
The pound has lost around 15% against the euro since the 23 June referendum. At that level, it costs an extra £225 million per year to import the current level of wine from the EU, the WSTA said.
And there is the prospect of tariffs on French, Italian, Spanish and other EU wines if the UK leaves the single market after it finishes its Brexit negotiations due to start next year, the WSTA added.
Much depends on whether supermarkets and larger retailers pass the extra cost on to consumers.
‘The importers are having to meet the increased costs, which is already having a significant impact on profitability,’ said Patrick McGrath, MD of importer Hatch Mansfield.
‘In the immediate aftermath of the [UK’s EU] referendum we were covered forward for foreign currency. However this “cushion” has now run out. This will mean that we will be forced to increase our selling prices.’
However, it is a mixed picture. Some industry analysts believe that price rises will not kick in until early 2017. Discounting is also often fierce in the run-up to Christmas.
A Majestic Wine spokesperson said this week that it wouldn’t be rushing to raise prices. ‘Majestic forward-bought currency in advance of the referendum so our prices will not alter for the foreseeable future,’ she said.
Nearly all WSTA members surveyed by the wine trade body earlier this year supported a ‘remain’ vote in the EU referendum.
Extra reporting on Majestic by Jane Anson.
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