Brexit update: September 2020

Wine trade braces itself for import disruption

We contacted a range of independent merchants, as well as some suppliers, and asked them how worried they are, on a scale of 1 to 10, about European wine imports after Brexit comes into effect. They also outlined the scale of the problem, and what indies should be doing to prepare

CHRIS PIPER
Christopher Piper Wines, Ottery St Mary, Devon

Level of concern: 8.

How would you summarise your main concerns about the situation?
The increased amount and costs of documentation will make specialised groupage shipments from our small European growers prohibitively expensive. Do we pass these extra costs onto our customers or just forget about this essential part of our business?

Are independents aware of how much disruption they could be facing?
I’m not sure that they are. We have been studying this and discussing all the implications with our freight hauliers – and the conclusions do not make pretty reading.

What should indies be doing right now to prepare for what’s coming?
Writing to their MPs about their concerns. There’s not much else they can do, other than pray!

Some people assume that, one way or another, the problems will be resolved because all parties have too much to lose if trade is constrained. Are they wrong to be so optimistic?
There’s nothing wrong with a bit of optimism but in reality, neither European wine growers nor UK wine importers really have any clout with their respective governments.

DEINIOL AP DAFYDD
Blas ar Fwyd
Llanrwst, north Wales

Level of concern: 7.

How would you summarise your main concerns?
More out-of-stocks, supply chain problems, costs rising, but not for product.

Are independents aware of how much disruption they could be facing?
Independents will be more aware than non-thinkers.

What should indies be doing right now to prepare for what’s coming?
Keep flexibility in mind. Have alternatives ready for everything.

Some people assume that, one way or another, the problems will be resolved because all parties have too much to lose if trade is constrained. Are they wrong to be so optimistic?
They seem to have more confidence in the pen-pushers than me. A lot of material is in flight, heading for the fan … but we will survive.

SAM JARY
Black Hand Wine, Penrith

Level of concern: 10.

Summarise your concerns about Brexit.
This is not a government that appears to be too concerned about details or the fate of small, independent retailers. I am extremely worried about freight delays and price rises but, most of all, about the VI-1 forms or, more specifically, the reported charge of £400 per form. If this does go ahead, it will almost certainly put me and every other small wine merchant importing high-quality, low intervention European wine out of business. My only hope is that the threat of VI-1 forms is a negotiating tool rather than an oversight, but I fear that this government cares more about quantity than quality.

Are indies aware of how much disruption they could be facing?
I can’t speak for other independents but I’m far more worried about Brexit than Covid-19. I also know that the general public has never heard of VI-1 forms and only has the haziest notion of what a slow-motion car crash Brexit could be for them and for their favourite wine merchant.

What should indies be doing to prepare for what’s coming?
How do you prepare for something that you know will put you out of business if it goes ahead as planned? I have written to my local MP and Rishi Sunak for clarification but neither has yet replied – I would encourage all concerned independent wine merchants to do the same. I am also trying not to worry about the ifs, buts and maybes as there is no point, but I’d be lying if I said I hadn’t started thinking about a Plan B, career-wise. And a Plan C.

Some people assume that, one way or another, the problems will be resolved. Are they wrong to be so optimistic?
When I mention VI-1 forms to a pro-Brexit customer, I am always assured that it will not happen and not to worry about it. I do hope they are right, but I fear, where good wine is concerned, this government knows the cost of the everything and the value of nothing. We shall see.

DANIEL LAMBERT
Daniel Lambert Wines

How worried are you about the way Brexit is going to disrupt wine imports from Europe?
Very. Talking with my MP, the WSTA and DEFRA, it seems the government has made no plans for a no-deal exit. On asking HMRC, their direct answer to us was “we are not sure how this will work yet”. With just four months to go, it’s beyond a joke just how bad this government is at everything it touches.

How would you summarise your main concerns about the situation?
No plans, no direction from anyone, and nobody knows how it will work.

Are independents aware of how much disruption they could be facing?
Nope, not in my mind.

What should indies be doing right now to prepare for what’s coming?
Think about what they need to have in stock for all of January and order it in December, but let their suppliers know well in advance. Transport are already saying there will be extra cost to move stock in Europe in November and December, so this will lead to price increases.

Some people assume that, one way or another, the problems will be resolved. Are they wrong to be so optimistic?
Yes. We are dealing with a PM who is out of control of the basic facts. All the various minsters are out of their respective depths. There is no magic button, no deal is real and is now the most likely outcome. It’s bleak, and people need to wake up to the fact that the supply, once cut, will be very difficult to fix again.

EMMA ROBSON
Bat & Bottle Wine Merchants
Oakham, Rutland

Level of concern: 10.

How would you summarise your main concerns?
Our primary concern is delays in shipping (and possibly shipping being impossible) due to paperwork, namely Document VI-1.

Despite the existing DOP system across Europe and the UK, that protects quality and provenance of food and drink, HMRC’s guidance in the event of a no-deal warns us that our producers will have to complete a VI-1 form, or a new UK equivalent, which will be required to accompany every wine on a consignment (we usually ship a single, mixed pallet at a time) as it enters the UK.

We have now had confirmation from five different wine producers, all of different sizes and from different regions in Italy, plus two major Consorzios, that no one is aware of, or has ever completed a VI-1 form! This form has been used for wines produced outside of the EU being shipped into the EU.

As far as we have been able to ascertain, there is no system to support issuing a VI-1 in Italy.
With current HMRC guidance, it seems incredible – but it is actually possible – that we will not be able to ship any wine into the UK because this system does not exist!

The cost of this new additional analysis, once there are authorised analysts, would obviously be charged to us, the importer, thereby further increasing the end price of the wine – probably by a substantially higher amount than the duty clearance costs and any duty rises.

Are independents aware of how much disruption they could be facing?
Many independents buy from larger UK shippers rather than ship directly themselves; this type of independent may not be truly aware of the VI-1 threat, or maybe even the likelihood of price rises.

What should indies be doing right now to prepare for what’s coming?

Have as much wine in stock as possible on December 31.

If shipping after January 1, use shippers that offer duty clearance facilities.

Don’t invest in duty clearance software. We have sourced and purchased the software and licences (with European funding!) that will supposedly cover duty clearance at the ports through which our shippers currently enter the UK.

This software will integrate with both the allegedly obsolete CHIEF system (still running) and the new CDS system (that appears to be largely unused).

The software we have bought will be adapted accordingly to comply with whatever system HMRC puts into place for clearing duty, once terms have been decided.

I would NOT recommend investing in this! After much time wasted trying to determine the indeterminable with HMRC, we have come to the conclusion that, if it works, this software will only be of use for clearing the duty on wine that we bring back ourselves in a van – the obviously fun, but very tiny, part of our shipping.

Instead, it appears the duty return we will be able to make will only be relevant once the wine has actually arrived in a UK port.

We will apparently still be unable to provide sufficient documentation using the software, that would be required for wine being transported by a third-party shipper, whilst crossing country borders between Italy and the UK.

After 15 years of clearing our own duty, we will sadly have no choice but to use the clearance facilities provided by our shippers.

JON KEAST
Scarlet Wines, Hayle, Cornwall

Level of concern: 8.

How would you summarise your main concerns about the situation?
Delays primarily but also the price to cover admin and hassle.

Are independents aware of how much disruption they could be facing?
No.

What should indies be doing right now to prepare for what’s coming?
What could you possibly do? Maybe hold more stock?

Some people assume that, one way or another, the problems will be resolved. Are they wrong to be so optimistic?
Yes, no goodwill remains thanks to the Tory idiots who have brought this shitshow down upon us all.

CLIVE STANTON
Eton Vintners, Berkshire

Level of concern: 9.

How would you summarise your main concerns?
The pound is predicted to fall to 96 cents in next few months so yes, there will be price rises and we will be heading for a no-deal scenario or a very shaved-down trade agreement causing shipping delays directly or through the supply chain. I am also worried that consumer will still expect to pay the same amount and it will be the trade that will decrease its margins.

Are independents aware of how much disruption they could be facing?
Most independents are aware of this situation.

What should indies be doing right now to prepare for what’s coming?
I would buy stock before December 31 that will last for at least six months, as for the first few months it is going to be chaos importing. Make sure that you have all the relevant documentation with HMRC.

Some people assume that, one way or another, the problems will be resolved. Are they wrong to be so optimistic?
I have been to France, Portugal and Spain over lockdown and this summer and they are very concerned about the UK trade.

But there is the big BUT – and I heard this from everyone I spoke to: ‘If the UK does not want to contribute to the EU then you cannot have preferential treatment in our market’.
Either way, deal or no deal, things will change for the worse and everyone will pay more to trade.

YANNICK LOUÉ
Le Vignoble
Bristol, Bath and Plymouth

Le Vignoble’s Bath branch

How worried are you about the way Brexit is going to disrupt wine imports from Europe?
I think it is very easy to slip down the negative route. I am all for keeping positive. We don’t really know what the future will be. I would say let’s prepare as much as we can, but more importantly keep going. I believe we have seen worse than Brexit in the past.

How would you summarise your main concerns?
Prices and shipping may be the biggest problem. Europe will have plenty of juice to sell, so supply won’t be affected. FX rates will be a disaster, but we have been there before during the financial crash.

Are independents aware of how much disruption they could be facing?
Probably not as much as the big boys but we are all on the same island so we will have to stick together. The pandemic has shown us that the big boys suffered while indies succeeded.

What should indies be doing right now to prepare for what’s coming?
I would say don’t stress too much about it. Don’t kill your cash flow either, as every problem has a solution. No one knows what the future will be: just watch your overheads, and keep on selling.

Some people assume that, one way or another, the problems will be resolved. Are they wrong to be so optimistic?
I don’t think so. I too believe in the above. Let’s not forget that UK is a big part of the world wine business. Unfortunately today’s media are good at drawing dark pictures rather than showing boring good news.

CRAIG DURHAM
Buckingham Schenk

Level of concern: 4.

How worried are you about the way Brexit is going to disrupt wine imports from Europe?
The fact the UK government still has to work out what some of the rules will be once we have left raises concerns, but the fact we are part of a European family-owned wine group with colleagues across the EU reassures me that we will naturally find a way through this.

How would you summarise your main concerns about the situation?
I think some shipping delays might be inevitable if the government does not address the need for additional paperwork rapidly, but I do believe it will all work and be clearer eventually.

After all, our European colleagues want to continue supplying their wines to us and we and our customers want to carry on buying their wines!

Are independents aware of how much disruption they could be facing?
Most of our independent customers are aware of potential issues and we are working closely with them to try and minimise them.

What should indies be doing right now to prepare for what’s coming?
Work closely with their suppliers and plan ahead so they have sufficient stock of their key lines.

Some people assume that, one way or another, the problems will be resolved. Are they wrong to be so optimistic?
I absolutely agree with that. The UK has been a major importer of European wines for centuries and it is unlikely to change in the future.

NIK DARLINGTON
Graft Wine Company

Darlington (right) with fellow Graft director David Knott

Level of concern: 6.

How worried are you about the way Brexit is going to disrupt wine imports from Europe?
My score of six out of 10 is perhaps surprisingly low, even to myself, partly because a disconcerting lack of information on which to base things but also I confess because there are so many other things to worry about at the moment.

While a vehement opponent to Brexit, for our industry at least I have also always harboured some hopes that the main European wine producing countries wouldn’t dare cut off their noses to spite their faces and do anything to damage trade of their wines with the UK.
I am nothing if not an optimist, but I accept that may prove to be wishful thinking.

How would you summarise your main concerns?
I can imagine price rises because of a general inflationary pressure from a weaker currency. It might take a while for logistics costs to work their way through the system. There might be shipping delays, which could force importers to hold more stock.

Are independents aware of how much disruption they could be facing?
I think they are, but given the year we’ve had, I think a lot of people are just trying to survive the pandemic.

I think all bar the very biggest are recognising that more now than ever they may need to rely on stable, well-prepared importers and agents rather than importing directly too.

What should indies be doing right now to prepare for what’s coming?
Lobbying their local MP to keep up the pressure on the government to ensure as smooth as possible a transition. Examining their stock lines with supply routes in mind and asking how vulnerable each wine or producer might be to disruptions or price instability, whether that’s because of the point of origin, if they ship directly, or the supplier they get it from.

Some people assume that, one way or another, the problems will be resolved. Are they wrong to be so optimistic?
No, I don’t think so – I am one of those optimists. Nevertheless we have become numb to being disappointed in recent years … so even optimists must be prepared to be cynics.

STEFANO CUOMO
Macknade, Faversham

Level of concern: 6.

How worried are you about the way Brexit is going to disrupt wine imports from Europe?
I am sure that prices will rise and supply may not be as smooth as usual, but it will be yet another operational hiccup that we can overcome. Part of the independent, experience-based offer is delivering the best wine environment and alternatives to what the customer might have come in for.

How would you summarise your main concerns about the situation?
Price rises and delays – but I believe it will be an opportunity for the independent sector to draw in new customers and understand price-to-quality ratios and build potential to source direct.

Are independents aware of how much disruption they could be facing?
Mixed bag – it helps that we already import a bit in from Italy and so see what our transport agency is going through and keeping us updated with. We are also in Kent, and so at the frontline of European scuffles …

What should indies be doing right now to prepare for what’s coming?
Building strong relationships with their suppliers and asking them to keep them updated with regards to what is happening and how their relationship will evolve. Supporting customers to buy up less but better. Looking at British wine!

Some people assume that, one way or another, the problems will be resolved. Are they wrong to be so optimistic?
The focus should be on continuing to trade effectively and flexing around obstacles. Brexit will occur and disrupt; the winners will be those with a strong team and experience and understanding of their customers’ needs and loyalty.

Wine merchants might need to diversify more than they have historically. The barrier of Brexit should encourage innovation and the broader pivots. People don’t buy wine just for the sake of wine, but to make themselves and others happy. In that context, there are lots of other opportunities for a talented merchant to deliver.

DAN KIRBY
Corkr
Beccles, Suffolk

Level of concern: 7.

How worried are you about the way Brexit is going to disrupt wine imports from Europe?
The problem is, deal or no deal, wine will be affected, and we genuinely can’t predict the next announcement from this disastrous government.

Can you summarise your concerns?
Price increases, logistics and delays. But it will affect much more than wine. I think it will be the agents and importers that will struggle in terms of pricing and logistics, which will have a big knock-on for indies sourcing from the UK wholesalers. It could lead to a homogenisation of ranges, more agency reshuffles and ranges getting pared down. However, we might just see a steadying of “those-that-can” still remaining loyal to their indies.

Are independents aware of how much disruption they could be facing?
Not at all. I think there has been some great social noise, webinars, and progress; especially with the help of the WSTA and The Wine Merchant, who have really done their bit. I’m not sure whether it’s turned enough heads or resulted in enough political traction.

What should indies be doing right now to prepare for what’s coming?
Scrap the VI-1s by lobbying their politicians. Bide their time commercially. Focus on their customers, locking in a solid proposition and sticking to what they do best.

Everyone is online now, so it’s impossible to compete digitally. We use our online store and digital channels like a shop window, but are focused on our regular customers, and getting our range right.

We’re also building in additional UK-based suppliers so that we’re not at all tied to a few. We are doing less with more. A bit here and there from an expanded range of partners, getting the right wines from the right agencies. Shipping two or three wines ourselves very strategically.
I wouldn’t go stockpiling, or over-investing in tech or new projects.

Some people assume that, one way or another, the problems will be resolved. Are they wrong to be so optimistic?
Deal or no deal, wine is still going to be affected by the self-imposed, costly hindrances we’re currently planning on implementing on ourselves regardless. Scrapping VI-1 forms plus no deal will be awful, yet manageable, while the option of keeping VI-1 forms and a “good deal” is still disastrous for the UK the wine industry.