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Brexit: Independence Day?

Published:  09 December, 2020

With the end of the Brexit transition now hurtling down the track, many indies may not be aware of quite how much post-1 January changes could affect their businesses, as Andrew Catchpole reports.

Perhaps because of the enormity of dealing with the coronavirus impact this year, there’s a sense that many independent merchants have shoved thoughts of Brexit aside, hoping that the end of transition on 1 January 2021 will really only affect those that import and export wines and spirits – in essence the key suppliers for most merchant’s portfolios. And that, despite the possibility of a temporary hiccup in EU-UK cross border trade as transition ends, many of the long-debated issues surrounding easing post-Brexit trade will be smoothed over further back down the supply chain.

“Not so” was the loud and clear message from a WSTA-convened webinar – an advisory discussion on post-Brexit trading for UK indepedent merchants and fine wine traders. 

Whether importing directly, buying solely though agents and importers, or mixing the two, all will be affected, stressed panel host and WSTA chair Michael Saunders. And this whether there is a no deal or a deal threshed out, possibly by the time Harpers lands on desks and doormats early this month.

The scope of what is to change – not to mention the details involved – is summarised in this complimentary Harpers analysis piece, but it’s worth a quick recap, along with what it means for the independent trade.

“Moving goods, ports, labelling, tariffs, more red tape, will affect all of us, no matter how big or small, and from speaking to those we supply there’s quite a significant element of lack of preparation in our industry,” said Saunders.

Managing risk

He added the catch is that many businesses are understandably flummoxed as to what it is they need to be prepared for, a point that Lizzy Rudd, chair of Berry Bros & Rudd, picked up on.

“Like everybody, we’ve faced all sorts of issues preparing for Brexit, exacerbated by not really knowing what we are preparing for – we are preparing for no deal at the moment… and as business leaders we have to manage risk as best as possible,” she said.

Rudd highlighted those risks as including a “considerable increase” in bureaucracy and red tape, systems updates, tax changes, etc, when it comes to importing and exporting wines, and getting those wines to customers.

Talking of the dangers posed to the UK, both in terms of its fine wine import-export global hub status and the likely impact on simply doing previously straightforward business as an indie merchant buying from EU producers, Rudd pinpointed two key concerns.

“We want our global customers to see the UK as a great place to buy and store wines and spirits and the risk is that this red tape, increased cost and changes to tax will mean they don’t.

“Additionally, some of our producers whose wines are in high demand [globally] may decide that they don’t

need the bureaucracy of the UK [and] will sell their wine where there is less regulation and not bother with the UK at all,” she warned.

The changes and obstacles currently faced by merchants from 1 January go far beyond the much derided and “silly imposition” of VI-1 forms (now delayed until the end of June – see analysis pages).

For example, packaging and labelling requirements will alter, with the need for over-stickering and change to meet new requirements on anchoring a wine to registered addresses in both EU export and UK import territories, plus fire-retardant wooden cases necessary, to name but two additional considerations.

A central part of the message delivered by the WSTA was that independent and fine wine businesses need to arm themselves with the knowledge of what questions they should be asking, and act now – preparing, as Rudd highlighted, for the most likely potential outcomes.

Going to the wire

Currently, though, with negotiations going to the wire (again) this is no clear-cut assessment, with the trade body itself referencing one-time American defence secretary Donald Rumsfeld, who famously spoke of “known knowns”, “known unknowns” and “unknown unknowns”, as a parallel of current Brexit uncertainty.

Nonetheless, WSTA regulatory & commercial affairs director David Richardson has good words of advice – while facing so much uncertainty, speak to your supplier, find out what will (or could) change and what needs to be done.

“The message from the supply side is that all the things you assumed you knew about getting goods from the EU are now at best questionable, and at worst wrong,” said Richardson.

“If you’ve made an assumption that you think you knew how to do something, now is the time to check that assumption and work out if your supply chain still works under the new regime. Because, even if things don’t necessarily change that much for you, they are certainly changing for the people who supply you.”

In words guaranteed to capture everyone’s attention, Richardson added that “costs are changing”, and that finding out how those changing costs would be shared along the supply chain would certainly be a wise topic to address.

Samples were another issue raised, with potentially large and prohibitive costs overlaid on the movement of such from the EU to UK, along with matters including a new need as of 2021 to declare an importer for wine from the EU (as, currently, with wines imported from outside the EU).

The wisdom of businesses – no matter how small or reliant on the supply chain to do their heavy import lifting – relying on lingering hopes of a status quo come bad deal or no deal, is further highlighted by a stark figure from the WSTA.

Currently, it costs around £5 on a case of wine to move from the EU to UK, or vice versa. If, however, “everything goes against us”, it could reach a heart and trade-stopping £75, which would further hammer businesses reliant on smaller-volume imports of more individual wines.

The webinar concluded with a call for independent wine businesses to use its pre-prepared letter template to write to both the MP in the area where their business is headquartered, and their own local MP, while also directing members of the trade to a further resource on the WSTA website, which can assist with the questions every business should be asking.