WSTA campaigning for suspension on wine tariffs as no deal Brexit looms

The WSTA is calling for a temporary suspension on wine tariffs to prevent prices rocketing in the event of a no deal Brexit.

The wine trade body said prices would reach an all-time high if the government cannot agree on a divorce deal with the EU before crashing out of the union.

It is campaigning for a six to 12 month suspension on wine tariffs to reduce the strain on the supply chain that a no deal Brexit would spark.

It argues that there would be minimal impact to Treasury coffers and probably cost much less than having to introduce a system for collection of tariffs on products that currently enter the UK tariff free.

Chief executive Miles Beale said: “Since the referendum, the WSTA has campaigned consistently for a deal with the EU that delivers frictionless trade in goods, with no additional tariffs or costs.

“If the UK ends up with a no-deal Brexit then wine businesses will have to cope with additional tariffs as well as another duty rise, which is highly likely to end up full square in the consumer’s lap, bumping up wine prices to an all-time high.

“We are calling on government to clarify their tariff plans now and – in the event of a no deal Brexit – to commit temporarily to imposing no tariffs on wines for at least 6 months. This would be a pragmatic solution with any loses to the Treasury covered by not having to implement a costly new system. It also leaves intact government’s ability to remove tariffs on wine permanently, but as part of a future free trade deal.”

The average bottle of wine has reached £5.73 in the off-trade (Nielsen) and the WSTA estimates that would rise by 20p in the event of a no deal Brexit.

Suppliers across the country are stockpiling wine, with Laithwaites owner Direct Wines bringing in an extra 2 million bottles, which represents a 40% increase. Bibendum PLB is ordering significant extra supply and Majestic is holding an extra 1.5 million bottles.

Simon Doyle, managing director at Concha y Toro UK, told DRN: “We have to be pragmatic and agile and anticipate different scenarios. Brexit is a challenge, but there’s a limit to what we can do in practice. We just have to make sure we have a good inventory. We are bringing a lot more inventory into the UK to help offset any challenges around the March-April period.”

Currently there are no tariffs on wines from the EU, Chile and South Africa. A no deal Brexit would result in the introduction of tariffs estimated to cost UK wine importing businesses over £100 million a year, the WSTA said. 

It added that the introduction of no deal Brexit tariffs would represent a double blow for wine businesses after the Chancellor decided to single wine for a duty rise at the Autumn Budget. From February 1, duty on a bottle of wine will go up 7p.

Add a tariff to the duty rise and VAT and this means an average priced bottle of wine, which today costs £5.73, will cost £5.93 in the event of no deal, an extra 53p a bottle more than consumers paid before the referendum result, when an average priced bottle of wine was £5.40. That would all be a result of duty, rather than the industry’s much-touted “premiumisation” agenda.

For sparkling wine, which is taxed at an even higher rate, an average priced bottle currently costing £7.14 will go up 37p to £7.51.

The WSTA also warned that a no deal Brexit would also mean the loss of access to the EU’s Excise Movement Control System which tracks alcohol coming in and going out of the country documenting consignments electronically. 

EMCS allows alcohol to and from the EU to be moved on with no extra checks, without it “ports are likely to descend into chaos”.

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