More choice and better prices; two far-reaching implications of the UK scrapping import certificates (VI-1)

By James Miles, Chairman and Managing Director (Co-Founder) at Liv-ex & WSTA Board Member. 

The news over the weekend that the UK Government intends to scrap wine import certificates completely from the UK Statute Book is a fantastic outcome and a hard-won victory for the WSTA, its members and their friends in Parliament and the Press. As the WSTA suggests it is “a victory for common sense as well as being great news for the UK wine industry and UK consumers”. I would add that it is also a big win for free trade and will likely have far reaching implications for the wine trade, not just in the UK, but around the world.  

Wine import certification is a uniquely European Union construct designed to protect the interests of European wine growers by undermining the competitiveness of overseas producers. There is no equivalent requirement for any other major trading nation, nor are there similar requirements for any other alcoholic drink inside or outside of the EU. It is embodied in a particularly pernicious EU form, known as VI-1, which requires a lab analysis on samples of every wine imported into the Single Market from a Third (non-EU) country. This lab analysis, which measures three types of acidity, two measures of alcohol content, dry extract, and sulphur dioxide (amongst other things) then needs to be certified by an official agency in the country of origin. There is no basis in food standards or consumer protection for collecting or certifying this data. 

The VI-1 form is expensive, time consuming and often impossible to complete, particularly if you are purchasing from secondary sources or small producers, which is often the case in the fine wine or independent sector. It is plainly ludicrous that the UK Government were ever planning to introduce such a non-tariff barrier for a country that imports 99% of all the wine that it consumes. Much has been made today of the £130m cost saving that scrapping the form will crystallise, but as I argued in an open letter to the Prime Minister last year, it also represents an easy win for the UK in its post Brexit trading relationship with the rest of the world.  

UK wine businesses are very good at importing, distributing, marketing, and exporting (other people’s) wine to and from all four corners of the world. We are genuinely world class at wine merchanting and the UK is the global hub for the wine trade – a position we have enjoyed for hundreds of years. Our competitive advantages include a very dynamic domestic market, long-term relationships with leading wine producing regions, an effective regulatory framework, an advantageous position in the global time zone, world-leading wine education and logistics, and the English language. There are more than 5,000 wine merchants in the UK and wine supports more than 130,000 jobs. The UK is the largest net importer of wine in the world and the 10th largest exporter. Wine is also – rather remarkably given exports of English wine amount to less than £30m – the UK’s 6th largest food and drink export, the UK’s favourite alcoholic drink (with more than 33 million consumers) and generates over £4bn a year in wine duty for Treasury coffers. But since Britain joined the EU in the 1970s, European wine growers have had a substantial advantage in the UK over producers – particularly small ones – from the rest of the world. This I believe is reflected in the fact that 94% of Liv-ex sales is derived from trading European labels and that 55% of all UK imports come from the EU. 

This change promises to remove import certification from all our wine imports and level the playing field by making it substantially easier for the UK trade to buy wines from outside the EU. Many argue that the UK is already the best place in the world to buy wine, but these changes will introduce even more choice at attractive price points and strengthen the UK’s competitive advantage as the global hub for wine trading. We are going to find many more interesting labels from beyond the near continent on our shelves, offering up new opportunities for the trade and more choice to consumers. I expect that the implications of this weekend’s announcement to be much more profound and far reaching than today’s headlines suggest. 

 

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