Indies count the cost of Brexit

Pre-Christmas stockpiling has shielded many from the impact, but for some the problems have already arrived

Price increases, prohibitive red tape, delays at ports and certification charges for organic wines are among the many issues testing the patience and ingenuity of independents and suppliers as a result of Brexit.

Some indies seem relatively optimistic that port disruptions and shipping delays will be short-term, but there’s widespread feeling that the impact on prices caused by the admin costs of complying with red tape will be more permanent.

Issues around HMRC’s Chief system for logging customs codes for individual wines from EU countries were highlighted by Daniel Lambert, of Daniel Lambert Wines, on his Twitter feed and subsequently picked up by various media.

Lambert described the impact of Brexit as not just a car crash but “a multiple pile-up in the fog” and predicted on-shelf price rises of between £1 and £2 a bottle.

Other operators have told The Wine Merchant that prices will certainly rise but it’s too early to say by how much. Many have only recently placed their first post-Christmas orders having stocked up heavily in advance to avoid Brexit Day disruption.

Several maintain increases would not be as steep as Lambert’s predictions.

“I think everyone is still assessing the impact on cost and will wait to find out what happens on UK duty in the new Budget [in March],” says David Farber at Connaught Cellars in London.

“Brexit doesn’t have such an impact if you’re shipping huge volumes at a time but for smaller quantities, it has a big impact on price. 

“It can be absorbed when you have bought two pallets at a time because it’s divided across thousands of bottles.

“When we work with small artisan winemakers and get an allocation of 40 or 60 bottles, the impact is quite huge.”

Chris Piper at Christopher Piper Wines in Ottery St Mary has a similar take.

“We are specialists in dealing with small estates, so we do a lot of groupage work,” he says.

“If you’re bringing in 25 cases of Puligny from one grower and 30 Meursault from another, each consignment from each grower will have something like €52 extra cost of documentation. 

“But even our freight guys don’t know exactly how much [the extra costs will be] yet, so the issues are yet to unravel,” says Piper. “We know there’ll be extra costs, but whether its 30p or £1 a bottle, who knows?”

Retailers have also started to see some price increases from UK-based suppliers.

Jeff Folkins at Dalling & Co in Kings Langley says: “We’ve seen some small increases but not big whacking ones. 

“I have to say the service [through the pandemic] has been exceptional from most of them, bending over backwards to be helpful, with faster deliveries and smaller minimum drops. At the end of it all we’re going to remember the ones that really helped us out.”

Both Folkins, and Dafydd Morris at Cheers Wine Merchants in Swansea, say European producers they buy direct from have actually offered discounts on wine prices in an effort to maintain partnerships through the Brexit fallout.

“The winemakers are trying to be as helpful as possible to get through the transition,” says Morris. “They don’t want to lose the business.

“We have had notice from one big UK importer that they expect to see a 10p per bottle rise.”

Hal Wilson at Cambridge Wine Merchants says the rules on organics and the general extra burden of red tape and shipping lead times – compounded by a global shortage of shipping containers – will make it harder for indies to be nimble in buying.

“It might mean you hold more stock that you don’t necessarily need in case there’s extra demand – or buy twice as much to keep down the costs of declaration,” he adds. 

“You can’t really be nimble and react to a really nice review, because the wine’s probably not going to arrive in time.”

Wilson says a consignment of 19,000 bottles that should have shipped in early December was still awaiting UK customs clearance in late January, missing the boat for the Christmas trade it was intended for. 

Wilson raised the case in the Commons through his MP Darren Zeichner, shadow food and farming minister, and he urges other indies to report similar experiences to their own MPs to provide evidence to press the government to act.

He also points out that the issue of VI-1 forms – to certify that wine has passed lab tests to confirm technical specs of wines – has not gone away, with the stay of execution on their introduction running out at the end of June. 

“It will be another unnecessary cost or barrier to trade,” Wilson says. “Everything that would go on a VI-1 is covered by the GI or winemaking rules of the country of origin.”

Wilson says a small number of boutique producers with which Cambridge Wine Merchants deals direct have already decided that the extra red-tape burden already in place is too much.

“There are a few who will not bother,” he says. “They’re out pruning vines at the moment and they don’t want to come home and have to deal with a whole load of stuff that they don’t need to, because they can sell to other markets. They don’t need the hassle. 

“I’m not going to say it will be a sizeable percentage, but if we have more red tape thrown at us … ”

Tony Schendel, sales director at Hayward Bros, thinks the Chief issues will be trickier for importers who operate their own bonds.

“We use LCB which has these super systems that sit on top of Chief which does the work very quickly but is very expensive, so a smaller shipper wouldn’t be able to do that,” he says.

“The biggest worry from our side is that, having seen a flourishing independent sector, you don’t want to see people struggling to find interesting wines because small producers decide the paperwork is too much hassle for them. 

“I know one who’s coming up to retirement who’s decided it’s just not worth changing the paperwork for a few more years, so he’s not going to export to the UK anymore.

“The paperwork [for importers] is a pain, but anything we’re shipping is getting here.

“We’ve shipped from a little grower in southern Rhône two days ago and it will be here [six days later], and that’s a producer that has never shipped to the UK before.

“I think it’s causing the shippers and the bond problems but they’re talking to each other and sorting it out.

“There will be price rises feeding through the system. There’s no doubt that it is adding about €100 to a pallet of wine and another chunk if it’s organic, so I think we’re looking at around 50p a bottle [on the retail price].”

David Farber at Connaught Cellars says his business has put a hold on a small but important portion of its business selling single bottles to private clients and corporate customers in the EU, because parcels were being delivered with demands for extra customs charges.

“The taxes they get when they receive the goods for clearance are prohibitive,” he says. “We sent two whisky glasses to someone in Dublin and they got hit by an £80 tax on arrival. Shipping companies will take care of the paperwork but they will charge a fee which could increase a £50 or £100 gift by 50%. We are losing this part of the business.” 

Jeff Folkins at Dalling & Co has also experienced this issue. 

“We sell a bunch of hampers to Europe and half of those have come back,” he says. “If we want to send them out again, every product in the hamper has to have a country-of-origin certificate. It’s so ludicrous we’re not going to bother.”

February 2021