The start of 2021 brings with it a new dawn for the UK and the EU. As such there is much apprehension from both parties about the shattered status quo. Whilst the future is more obscured than ever before, preparatory work in the fine wine industry has been going on behind the scenes since the seismic 2016 referendum.
The media has placed great emphasis on the infamous VI-1 import certificate which will be required to bring wines from the EU to the UK as of July next year. This extra paperwork and bureaucracy is estimated to increase costs by approximately £70-130 per shipment. However, IG Wines regularly bring in large volumes of wines and have always tried to consolidate their shipments to minimise costs for their clients. This will not change and the increased costs for most shipments will be marginal. IG Wines has also secured new warehousing in France to allow more efficient consolidation and further reduction of costs. However, in the short term, until some agreement solidifies, importing small shipments into the UK may be problematic. The only other known change is the levy of the Common Customs Tariff which will become applicable to EU wines going forward. This equates to 7.5p- 9.0p per bottle of still wine and 19.5p for sparkling.
Another consideration is whether a deal can rise from the ashes in the coming days. If so, the UK can avoid falling back on to WTO terms. However, the contents of any deal remains unknown, but any agreement could reduce friction to trade going forward. This will likely result in GBP gaining traction against the Euro and prices for EU based wines will be more competitive for purchases denominated in sterling. However, in the event of a no deal, a sharp drop in GBP will likely be observed. This will cause an immediate benefit to those holding wines in the UK, as foreign buyers, EU or otherwise, are incentivised by the new relative value found in UK holdings.
Whilst things may still be on a knife’s edge as we enter the final furlong, the new normal will shortly come into view. As such, IG Wines will be publishing a comprehensive report on the market and new trading conditions in the new year.