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Liv-ex interview with Miles Beale: The future of the wine industry

Miles Beale is the Chief Executive of the Wine and Spirit Trade Association, which represents over 300 companies producing, importing, exporting, transporting and selling wines and spirits in the United Kingdom. The WSTA campaigns “for a vibrant and sustainable wine and spirit industry, helping to build a future in which alcohol is produced, sold and enjoyed responsibly”. This month, Miles Beale kindly set aside some of his time to talk to us about Brexit, the impact of US tariffs, sustainability and the future of the UK wine industry.    

How important is the wine industry for the UK?

The UK has been at the heart of the world’s wine and spirit trade since the 12th Century when Henry II had the bright idea of having the French send some wine. Since then, the UK wine sector has grown into an industry which supports 130,000 jobs, contributes £19 billion in economic activity, and wine is now UK’s favourite drink.

How has it evolved in the last 20 years?

The UK has secured its place at the centre of the world wine trade importing wine in bulk from all over the globe. Most of this is sold in British pubs, bars and supermarkets but also bottled here and exported around the world. Wine is now the UK’s 5th largest food and drink export, with around £630 million worth of wine exported from the UK in 2018.

What are the key issues that the UK drinks industry is currently facing?

The WSTA has continuously campaigned for the Government to publish a clear plan for the UK’s exit from the EU. Having listened to our membership, we know that the UK business neither wants nor can afford any more repeats of extensive Brexit planning prior to the two missed March and October deadlines.Sadly, we are still in a state of limbo as to when the UK will leave the EU and the prospect of a no deal is still not off the table. A no deal scenario – whether on 1 February 2020 or 1 January 2021 or any other time – poses a significant risk to our members.

But also the prospect of additional red tape, the devaluation of sterling and the Treasury’s insistence on imposing harsh tax rises on wine all present threats to the wine (and spirits) industry, perhaps especially for importers. Wine has been singled out by successive Governments for harsher treatment than any other alcoholic drink. Since 2010, wine duties have increased by 39% compared with beer duties of only 14%.

WSTA recently reported that there will be a 9-month transition period for VI-1s for wine entering the UK from the EU in the event of a no deal EU exit. What does it mean in practice? How would this impact the consumer?

The requirement for VI-1 wine import certificates from the EU (in the event of a no deal EU exit) would have cost the UK wine industry millions of pounds – and this is assuming EU wine producers would have been willing to produce the forms in the first place. We estimate that VI-1s would have added about 10p to the cost of a bottle of wine, but many businesses may simply have decided not to send their product to the UK – especially small producers – meaning the potential death of independent wine merchants and a massive reduction in consumer choice in the UK market.

For fine wine especially, the idea that businesses would have to crack open an expensive case of wine to test seemed completely impractical. The hard-won 9-month suspension period is a major relief for the industry. But the work doesn’t stop there. Our next job is to make sure the overly bureaucratic and expensive forms are never required. We need to introduce a new, simpler, electronic system for wine import documentation – that could work as well for EU and non-EU wines alike.

What is the WSTA’s vision for the wine trade after Brexit?

To maintain the UK’s place as the key hub for trade in all wines, exports as imports, with ambitions to grow the domestic wine industry whose products now hold their own on a global stage. We would like a post-Brexit UK trading free of tariff and non-tariff barriers, as well as the UK joining the World Wine Trade Group. On top of this, we would hope to see the Government acknowledging the importance of the UK wine industry and supporting it by cutting wine duty.

As well as being appropriately regulated and taxed, we are keen to ensure our members are doing more to share best practice on environmental sustainability. Over the last decade our sector has made enormous strides to reduce packaging, improve recycling and invest in renewable energy. Working together we can – and must – do more, because responsibility is, rightly, getting greener.

How can the wine industry become more sustainable?  

How can it not?! It is imperative that the global wine industry does even more even faster. To find out more about how individual wine businesses can be more economically, environmentally and socially sustainable, read the WSTA’s Wine and Spirit Environmental Best Practice document.

What challenges and opportunities do you see in 2020?

In one word the answer is “trading”! More specifically:

Challenges = future of post-Brexit Britain and losing access to the EMCS system;

Opportunities = shaping the future of the UK as the world’s wine hub, not least by improving access and lowering barriers to trading wine in the UK.

The UK continues to be one of the most expensive countries in the EU to buy alcohol, according to figures published by the European Commission. Do you see this changing in the future?

We hope the Government does more to ease the pressure on cash-strapped consumers by cutting the UK’s punishing excise duty regime. Following a freeze to wine duty in November 2017, we saw record wine receipts rise to almost £4.4 bn. However, following the increase to wine duty on Feb 1st this year, we have seen a decline in sales and a decline in wine revenues. A duty cut for wine would help bring prices down, allow businesses to grow and possibly employ more people – and it would also bring in more revenue for the Exchequer.

Earlier this month, The World Trade Organisation ruled that US can impose the ad valorem tax of 25% on numerous European products, including Scotch whisky, French, Spanish, German and UK still wines. What could be the potential consequences for the UK wine industry?

Frankly, it’s a worrying trend – especially for a country looking to liberalise global trade post-Brexit. WSTA continues to work with the UK Government and our partners to encourage the US to de-escalate tensions related to trade between the EU and US.

Wine is the 5th largest UK food and drink export and the US is one of the leading markets for those exports. As with the tariffs put in place against US whiskey exports in 2018, we believe that neither business nor consumers win in trade wars, and we support the removal of all alcoholic beverage tariffs between the UK and US at the earliest opportunity. The US and European wine and spirit industries have a long-standing history of trade and cooperation and the WSTA continues to believe that industry and consumers on both sides of the Atlantic are better off when we work together and trade openly.