With over a decade campaigning for fairer alcohol taxation, Miles Beale is CEO of the Wine and Spirit Trade Association – and spokesman for Wine Drinkers UK. This is a sponsored post by Wine Drinkers UK.
Stop somebody in the street (social distancing guidelines permitting) and ask them to name one of the UK’s top exports, and they might say cars, the British music industry or pharmaceuticals.
You may have to wait a while until you find somebody who says wine, despite the fact that total UK wine exports were worth almost £650 million a year prior to Covid-19.
Combine this fact with the knowledge that Britain is the second-largest importer of wine by both volume (after Germany) and value (after USA) , and you begin to understand the UK’s place at the centre of the international wine industry.
Wine trading with the EU has become more bureaucratic and costly since 1 January, but with the UK now fully outside the EU, the Government has an opportunity – some might say an obligation – to roll back protectionism inherited from EU membership. The Government’s appetite for swift action will determine the future success of the sector and could unlock the opportunities for growth that exist around the world, making the Government’s vision of ‘Global Britain’ a reality.
Today, the UK is already a global centre of wine trading (including in fine wines), wine knowledge (hosting the biggest global provider of wine education), and home to one of the most diverse and democratised wine markets. It’s little wonder that wine is the nation’s favourite alcoholic drink and provides 130,000 jobs.
And there’s a huge opportunity for future growth. As the Department for International Trade acknowledged in marking English Wine Week in 2019, by 2040 the industry is predicted to be producing 40 million bottles a year, equating to a retail value of £1 billion. Exports of English wine could reach £350 million over the same time frame.
The Trade and Co-operation Agreement reached on Christmas Eve – including the annex on wine trading – was welcome. It ensured wine tariffs were not introduced and new red tape delayed until 1 July. However, with more than 50 per cent of wines on the UK market coming from the EU, the new arrangements for wine trading are more complex and becoming increasingly expensive. If left unaddressed the initial hit to the UK’s thriving, SME-packed wine industry, its global hub status, and its domestic market will never be recouped.
So what is the solution? In short, it lies in harnessing the UK’s post-Brexit trade policy – including striking deals with wine producing nations such as Australia, New Zealand and the United States – to maintain and enhance our global wine status. These free trade deals provide a golden opportunity to remove wine tariffs and, in parallel, to scrap protectionist EU non-tariff barriers such as the costly VI-1 certification requirement.
Arguably, given the relative weight of NTBs and their disproportionate and adverse impact on SMEs, a wine certification requirement should be dropped immediately – they are protectionist and serve no purpose.
Alongside bi-lateral trade agreements and in addition to the UK’s excellent decision to re-join the global wine standards body (the OIV), the UK should also act to boost its role in the global wine trade by signing-up to the World Wine Trade Group. The group already includes some of the world’s largest wine producers, such as Argentina, Australia, Chile, and the United States and provides the best route to achieving mutual recognition of wine making practices – which would support the global wine trading and in turn the UK’s ambitions.
And where some of these actions may take time, it doesn’t mean the Government can’t take supportive action domestically in the meantime. An ideal first step is using the forthcoming Budget to deliver a cut in wine duty for the first time since Nigel Lawson (whose picture hangs on the wall of Rishi Sunak’s Treasury office) was Chancellor in 1984.
With British drinkers paying fully 68 per cent of all wine duties collected across the EU27 and the UK prior to the pandemic, wine the most popular alcoholic drink in the UK, and wine sales essential to the recovery of the hospitality industry, cutting wine duty would be a ‘win-win-win’ for businesses and consumers – and also the taxpayer, with cuts and freezes proven to increase revenue to the Exchequer. As the UK looks to recover from Covid-19, a duty cut would offer a welcome down-payment on securing the UK’s global wine hub status and potential, not least through helping our wine exports bounce back after having more than halved during the pandemic.
The opportunity for future growth in the British wine sector is there for the taking. With swift action on tax and trade, the Government can first secure and then build on the UK’s global hub status that the industry currently enjoys. But it’s a time-limited opportunity to realise Global Britain’s ambitions in our sector. It’s now up to the Government to seize it.