27 May 2021 Following yesterday's Buying direct post Brexit, we're republishing this related article on the extra bureaucracy for cross-Channel wine shipments since Britain left the EU.
27 March 2021 A version of this article about Brexit effects on UK wine imports is published by the Financial Times. Above is the paperwork associated with just one weekend's arrivals of wine in bond at Freight Transport's offices in Portsmouth – excluding anything duty-paid. The ream of paper provides scale …
Nadhim Zahawi, Minister for COVID Vaccine Deployment, is perhaps an unlikely patron saint of the UK wine trade. Yet the UK’s enviable vaccine rollout has helped strengthen sterling, which has helped British wine merchants cope with the increased costs of importing wine from the EU post-Brexit.
Instead, these wine merchants are complaining most vociferously about transport and paperwork. And some of the paperwork is just that. Since Brexit, the seamless digital system that had been in place for importing EU wine into the UK has been replaced by a much clunkier one that involves filling in printed forms.
Philip Cox’s Romanian winery Recaş exports all over the world but sells sufficient wine in Britain to generate more than £7 million a year in UK tax revenue. He is incensed by the fact that ‘the UK has single-handedly decided to go back to paper documentation when everyone else in the world is going digital, as was the situation within the single market. The CHIEF [customs clearance] system is a joke. It’s 40 years out of date and not fit for purpose.’
Meanwhile, French wine producers have to register with French customs and then complete a special export declaration form, an EX1. Many of them have been told by their local customs person that these are so complicated that they should pay a special agent to handle them. This can cost between €50 and €70 per consignment, plus set-up fees which may be too onerous for small producers.
If the wine producer insists that the UK wine merchant pays for the EX1, the minimum additional charge per consignment, to include UK import documentation, is £110 and often much more. Smaller companies may take only a single pallet of wine (generally 600–720 bottles) from an individual producer, which would mean paying an extra 15p a bottle, at least, before any mark-up.
According to Simon Taylor of Stone, Vine & Sun, ‘It used to be pretty obvious that unless one shipped a huge quantity from the New World, shipping from Europe was cheaper. That is no longer the case.’
The cost of transporting wine has increased enormously since 1 January. This is partly because the additional new bureaucracy has added to journey times. With the mixed loads that are so common for interesting, artisanal wines, a single error on just one of many forms can hold up a lorry for a day or more. Higher costs are also partly in place to compensate for the many trucks that have to cross back across the English Channel empty now that exports to the EU have shrunk. Freight Transport, specialist wine shippers, report that 30–50% of their trucks headed for Europe cross the Channel empty. Before 2021 the proportion was less than 5%.
British wine merchant Private Cellar ship wine from the EU to the UK and Dubai. For Dubai there is no EX1, merely an electronic certificate of origin that costs a few euros. For the UK, the process is more complicated. According to Nicola Arcedeckne-Butler MW of Private Cellar, ‘There is a lot of bad feeling from many French authorities and even growers that it was our choice [to leave the EU], not theirs, so we have to accept the consequences.’ Since Brexit she has produced a flow chart illustrating how to import wine into the UK – with 25 different stages on it.
Wines shipped in smaller quantities are being penalised most by the new system. An extra pound or two per bottle won’t make much difference at grand cru or classed growth level. And wines destined for supermarkets in massive tankers and multiple-pallet loads will be least affected. But the small wine farms, which send mid-priced wine in mixed loads to the sort of UK wine importers that are often of most interest to keen wine lovers, are at risk.
So far, they have been saved by the strengthening of the pound. This year, for example, Mark Hughes of The Real Wine Company imported two pallets from Laurent Miquel in the Languedoc. While his freight costs rose from £461 to £541 compared with last year, the improved exchange rate has meant the wine was actually 5p a bottle cheaper.
Talking of pallets, they too are causing problems. Now that the UK is no longer in the EU, they have to be certified free of wood pests, which is another extra cost.
Importing organic wine is about to become trickier still. From 1 July, UK importers will have to pay about £750 a year to belong to the UK’s Soil Association or a similar body and undergo regular inspections to check for cross-contamination between organic and non-organic items. The importer will have to send a paper certificate of inspection to the grower, who sends it to their certifying body for a stamp. The original certificate has then to travel with the goods and be made available to the port health authority. Expect to see record imports of organic wine in June.*
And then there is the business of samples. These are essential to importers adding new wines to their portfolios – and also to wine writers. Louis Wood, logistics specialist at Indigo Wine, describes the current situation as ‘a nightmare. Packages can be held up in customs for weeks at a time and many couriers seem like they have given up.’ I know to my personal cost that UK duty and VAT are now, for the first time in my lifetime, demanded on wine samples sent from the EU. Tom Ashworth of Yapp Brothers is a little more sanguine, describing the samples debacle as ‘a bit of a pain. We were charged £50 fees for two samples worth €5 in January.’
Ben Henshaw of Indigo Wine, who pre-pandemic specialised in supplying restaurants and bars, sees a wider human problem stemming from Brexit. ‘Many restaurants’ front and back of house staff were dominated by workers from Europe and it seems post-Brexit the UK is a less attractive place for those people’, he says. ‘This will have a long-term negative effect on the hospitality trade, and its suppliers.’
Meanwhile, things are looking brighter across the Atlantic. The 25% US import tariffs imposed on a raft of EU wines in October 2019, as part of the Airbus dispute, have just been lifted. Beleaguered US wine importers hope they have been forever. Harmon Skurnik of Skurnik Wines in New York, who is on the board of the US Wine Trade Alliance lobbying group and who reckons he paid more than $2 million in tariff-related taxes last year, emailed expressing ‘optimism (finally!) after a long, dark period enduring a trade war that nobody wanted'.
By contrast, China imposed such crippling tariffs on Australian imports at the end of November that wine exports from Australia to China last December were just 2.3% of those the previous December.
I have never known so many political headwinds affecting the international wine trade.
* It was recently announced that the imposition of this requirement on organic wines, like the infamous VI-1 forms, is to be put off for another six months.
