Nadhim Zahawi, minister for Covid-19 vaccine deployment, is an unlikely patron saint of the UK wine trade. Yet the UK’s enviable vaccine rollout has helped strengthen sterling, which in turn has helped British wine merchants cope with the increased costs of importing wine from the EU since Brexit.
Instead, wine merchants — both importers and exporters — are complaining most vociferously about transport and paperwork. Not least because some of the paperwork is now just that: the seamless digital system that had been in place for importing EU wine into the UK has been replaced post-Brexit by a much clunkier one that involves filling in printed forms.
Philip Cox’s Romanian winery Cramele Recas exports all over the world but sells sufficient wine in Britain to generate more than £7m a year in UK tax revenue. He is incensed by the fact that “the UK has single-handedly decided to go back to paper documentation when everyone else in the world is going digital, as was the situation within the single market. The Chief [customs clearance] system is a joke. It’s 40 years out of date and not fit for purpose,” he says.
Meanwhile, French wine producers have to register with national customs and then complete a special export declaration form, an EX1. Many of them have been told by their local customs official that these are so complicated that they should pay a special agent to handle them. This can cost between €50 and €70 per consignment, plus set-up fees that may be too onerous for small producers.
If the wine producer insists that the UK wine merchant pays for the EX1, the minimum additional charge per consignment, to include UK import documentation, is £110 and often much more. Smaller companies may take only a single pallet of wine (generally 600-720 bottles) from an individual producer, which would mean paying an extra 15p a bottle, at least, before any mark-up.
(Talking of pallets, they too are causing problems. Now that the UK is no longer in the EU, they have to be certified free of wood pests, which is another extra cost.)
According to Simon Taylor of Stone, Vine & Sun, near Winchester: “It used to be pretty obvious that unless one shipped a huge quantity from the New World, shipping from Europe was cheaper. That is no longer the case.”
The cost of transporting wine has also increased enormously since January 1. This is partly because the new bureaucracy has added to journey times. With the mixed loads that are so common for interesting, artisanal wines, a single error on just one of many forms can hold up a lorry for a day or more. Higher costs are also partly in place to compensate for the many empty loads that are travelling from the UK now that exports to the EU have shrunk. Freight Transport, specialist wine shippers, report that 30-50 per cent of their trucks heading for Europe cross the English Channel empty.
British wine merchant Private Cellar ships wine from the EU to the UK and Dubai. For Dubai, there is no EX1, merely an electronic certificate of origin that costs a few euros. For the UK, the process is more complicated. According to Nicola Arcedeckne-Butler of Private Cellar: “There is a lot of bad feeling from many French authorities and even growers that it was our choice [to leave the EU], not theirs, so we have to accept the consequences.” Since Brexit, she has produced a flow chart illustrating how to import wine into the UK — with 25 different stages on it.
Overall, wines shipped in smaller quantities are most affected by the new system. An extra pound or two per bottle won’t make much difference at Grand Cru or classed growth level. Wines destined for supermarkets in massive tankers and multiple-pallet loads will be least affected. But the small wine farms, which send mid-priced bottles in mixed loads that are often of most interest to keen wine lovers, are at risk.
So far, they have been saved by the stronger pound. This year, for example, Mark Hughes of The Real Wine Company imported two pallets from Laurent Miquel in the Languedoc. While his freight costs rose from £461 last year to £541 in 2021, the improved exchange rate has meant the wine was actually 5p a bottle cheaper.
For those importing organic wine, things are about to become trickier still. From July 1, UK importers will have to pay about £750 a year to belong to the UK’s Soil Association or a similar body and to undergo regular inspections to check for cross-contamination between organic and non-organic items. The importer will have to send a paper certificate of inspection to the grower, who sends it to their certifying body for a stamp. The original certificate then has to travel with the goods and be made available to the port health authority. Expect to see record imports of organic wine in June before this kicks in.
And then there is the business of samples. These are essential to importers adding new wines to their portfolios — and also to wine writers. I know to my personal cost that UK duty and VAT are now, for the first time in my lifetime, demanded on wine samples sent from the EU.
Louis Wood, logistics specialist at Indigo Wine, describes the current situation as “a nightmare. Packages can be held up in customs for weeks at a time and many couriers seem like they have given up.”
Tom Ashworth of Yapp Brothers is a little more sanguine, describing the samples debacle as “a bit of a pain. We were charged £50 fees for two samples worth €5 in January.”
Ben Henshaw of Indigo Wine, who pre-pandemic specialised in supplying restaurants and bars, sees a wider human problem stemming from Brexit. “Many restaurants’ front and back of house staff were dominated by workers from Europe and it seems, post-Brexit, the UK is a less attractive place for those people,” he says. “This will have a long-term negative effect on the hospitality trade and its suppliers.”
Meanwhile, things are looking brighter across the Atlantic. The 25 per cent US import tariffs imposed on a raft of EU wines in October 2019, as part of the Airbus subsidies dispute, have just been lifted. Beleaguered US wine importers hope they have been suspended permanently. Harmon Skurnik of Skurnik Wines in New York, who is on the board of the US Wine Trade Alliance lobbying group and who reckons he paid more than $2m in tariff-related taxes last year, emailed expressing “optimism (finally!) after a long, dark period enduring a trade war that nobody wanted”.
By contrast, China imposed such crippling tariffs on Australian imports in late November that wine exports from Australia to China last December were just 2.3 per cent of those the previous December.
I have never known so many political headwinds affecting the international wine trade.
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