​Brexit as seen from Italy


Silvana Ballotta runs Business Strategies, an Italian company that specialises in helping Italian wine producers access the funds available in Brussels for promoting European wines outside the EU. See EU funds flow east. In the wake of the Brexit vote, I realised that at some point these funds may be available to be spent in the UK and asked Silvana for the following reflections. 

The 745 million euros’ worth of Italian wine exported to the UK last year was the single most valuable portion of our sales in Europe. Without this bright spot, our sales would not have increased at all. The 13.5% growth in Italian wine exports to the second-highest importing country in the eurozone served in fact to balance not only the loss of exports to Germany but also to make 2016 Italian wine’s most valuable year ever in the EU. The success of our wine is an endorsement of Made in Italy, metaphorically speaking, and represents a medal to wear with pride.

But what now? In Italian vineyards and cellars there is a feeling of unease. This can’t be denied, not just for the most obvious scenario of Britons' lower purchasing power thanks to the weak pound. There is also the possibility of reduced protection of our denominations. Perhaps Brexit will provide an opportunity for strengthening production in the New World? And if global warming continues, could English wine experience an unprecedented boom? The next big question would be, who would be more affected, the Italians or the French?

It is difficult to answer these questions. Something I am currently being asked frequently is: Will the UK become a target country of EU funds for promotion? No one knows for sure, even if all the experts think that sooner or later it will. Even in Brussels they tell me that they do not know. The outcome of Brexit is a ‘leap in the dark’ and the odds on funds being devoted to promoting EU wines in this new ‘non EU’ country are uncertain.

It is unknown what the conditions will be for the future, because negotiations have not yet been initiated. The European Commission does not aim to start any negotiation before the official presentation by the United Kingdom of Article 50. This comment goes for wine as well as, for example, the Erasmus education programme. It’s said that upon leaving the European Union, the UK will also abandon the customs union. We will need to find new forms of co-operation such as those currently adopted by the European Union with Norway and Switzerland.

If we review the trend in the UK, we discover that the market for Italian wine has over the last five years seen a record increase of 46.9%, more than double the increase in exports to Switzerland, more than double the world average, and almost three times more than the EU average.

This suggests to us that Brexit is a defeat because it breaks a mutually satisfactory status quo. So, what will happen with EU wine promotional funds? If we assume for a moment that these are already accessible by Italian companies, then we would see an explosion of events and a series of incentives to promote Italian wine and all their denominations in the UK once it leaves the EU, from the most famous to the least known who would have their moment of glory.

For the British consumer this would present an exciting opportunity to increase their knowledge. However, the consumer would want to easily access the wines, and at this point the currency devaluation and rising prices may play a decidedly negative role.

See also today's article by Walter in which he recommends the bargain alternative to Barolo.