The Wine & Spirits Trade Association has called on the government for support as new figures revealed the cost of a bottle of wine in the UK could increase by 29p as a result of Brexit.
According to the latest WSTA figures, an average bottle of wine coming from the EU would go up 29p, while wine from outside the EU would be 22p more expensive.
With 99% of the 1.8 billion bottles of wine drunk in the UK imported, any added tariffs would have a “punishing effect”, warned CEO Miles Beale.
As a result of the 15% drop in sterling’s value since 23 June this year, the cost of importing EU wine could go up £225m per annum, while the cost of importing wine from outside the EU could up by £188m, he said, adding a year like this would cost the industry £413m in total - the equivalent to a 10% hike in total alcohol duty.
While some of this might get passed on to the consumer, some would probably need to be absorbed by wine businesses, said Beale, adding it was now “vital” that government came out in support and did not raise duty and “inflict more damage” at the next Budget.
“We are just weeks away from the autumn statement and any increase in duty, on top of the post-Brexit sterling devaluation, would have dire consequences on Britain’s wine trade.”
Importers having to meet the increased costs were already seeing a “significant impact” on profitability, said Patrick McGrath, MD of UK wine importers Hatch Mansfield.
“In the immediate aftermath of the referendum we were covered forward for foreign currency. However, this ‘cushion’ has now run out, meaning we will be forced to increase our selling prices.”
Food inflation
The call for government support follows warnings by former deputy PM Nick Clegg that a ‘hard’ Brexit would send UK food prices soaring.
A paper published by Clegg this week warned that in the case of a hard Brexit, the UK would be required to impose tariffs on imports, and the EU and the rest of the world would be “obliged” to impose tariffs on UK exports, in line with World Trade Organization regulations.
This would be a major blow for the UK’s food and drink exports, and would result in surging retail prices for imported foods such as chocolate, cheese and wine, said Clegg.
The Liberal Democrats spokesman on Europe, who has been working with experts to understand the impact of Brexit across a number of sectors, argued the only way to avoid higher food prices would be to negotiate a Norway-style agreement, which would enable the UK to remain part of the single market despite exiting the EU.
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