European wines imports likely to be hurt by Brexit

It was hard to miss this week, but ARTICLE 50,the formal notification to start Brexit negotiations is underway.

The UK is a leading wine importer and accounts for £21 billion of wine sales according to the WSTA, with 55% of imports coming from Europe. The five biggest countries based on 2016 figures for the UK are Italy and France with Australia, Spain and New Zealand each accounting for half the value of France and Italy.

If a trade deal does not materialise then what will happen? Well currently European wine is protected by tariffs that add 0.24 Euros per bottle. This may not sound like much but is about the amount of money spent to make a £5 bottle of wine. Plus when all margins are added such as VAT and profit, the cost is about 50p a bottle of wine. This gives European wine producers a huge advantage when it comes to the bottom end of the market and why France and Italy dominate imports. After negotiations non-EU wine will be cheaper. If no trade deal is done then WTO trade rules will mean the UK would put a 32% tariff on EU wines, putting a huge hole in the billions of pounds of wine exported to the UK.