Wine at the Time of Brexit

 There is an imminent date that many are waiting for, each for different reasons, and which states, saved the case of further extensions, the United Kingdom's exit from the European Union. The date is set for October 31st, therefore in less than a month, in which will happen the complex process that takes the name of Brexit, the famous portmanteau of the English words Britain – better said, Great Britain – and exit. An event that, a well-known fact, will have consequences in many areas of social and political life in both the United Kingdom and the European Union. Added to these are, inevitably and no less important, consequences in the economic areas as well, since it is necessary to redefine the commercial relationships with a direct and, at the moment, indefinable impact for all the subjects carrying out import and export operations with the United Kingdom.

 The consequences of the brexit, in any case, will affect in a decidedly important way also the agricultural and food industries of all European countries, including the wineries producing wine – and in particular – the Italian ones. Italy is clearly not the only European country whose agricultural and food industries, including wine production, represent a very important part of the economic balance, however it is known that many of these, including wineries, export large quantities and volumes of products and wine to the United Kingdom. This seems to be quite an important problem, in fact, for many Italian wineries, as well as for those in other European countries, as the profit share deriving from the export of wine and alcoholic beverages to the United Kingdom is a very important part. Not least, it represents a very important profit even for entire areas, denominations and styles of wine, in particular Prosecco, which bubbles are very popular and loved in the United Kingdom.

 Brexit, which still does not seem to have taken any official form in terms of both conclusion and definition of commercial and political relations with European Union countries, is indeed worrying – in any case – for many wine producers in Italy. In fact, whether it will be adopted the so-called soft brexit – that is with a reciprocal agreement – or the hard brexit, also known as no-deal brexit – that is with no agreement – the economic consequences will have an important impact on both sides. As far as we are concerned, as Italian and European citizens, it will certainly be more difficult to export our products to the United Kingdom. In fact, the possible definition of more complex and less easy trade and exchange rules – which could very probably see the introduction of customs duties – sales prices in the UK market will increase with a consequent decrease in volumes.

 Confagricoltura (one of the main Italian farmer associations) provided a measure of the economic impact for wine trading, focusing on the fact the United Kingdom is currently importing agricultural and food products for about 40 billion euros each year from European Union member countries. As for wine industry, Confagricoltura reminds that 55% of the wines consumed in the United Kingdom are imported from European Union countries. Also in the United Kingdom have been made estimates of the impact of Brexit, in particular the consequences this will have on the importation of wine and spirits. According to an analysis conducted by the Wine and Spirits Trade Association – the British association for the trade of wines and spirits – consumer prices of these products are inevitably destined to increase and in a decidedly important way. A measure that, obviously, is a direct consequence of the introduction of specific duties as well as of higher costs for importation.

 Confagricoltura also informs that the cost of customs duties has been estimated at about seventy million pounds a year, a figure that will be borne by consumers and will inevitably lead to the loss of competitiveness of imported products. An expectation that evidently worries the operators of the United Kingdom, who are trying to make appropriate stocks of products by buying them according to the current European commercial rules, in view of the unavoidable increase of prices. The wine industry alone –  according to Confagricoltura – has seen an increase of orders by 20% compared to past years: a figure clearly providing a measure of how the effects of Brexit are perceived by the operators of the Kingdom sector. A figure that, in all likelihood, will not record the same result in the next months, especially in the case the so-called hard Brexit will happen and which would lead to a stop, certainly temporary, of trading and until it will be established new agreements.

 The agricultural, food and wine industries in Italy are showing concerns also regarding the consequences of the increase of the prices for the Italian products. It is very likely, in fact, the increase in sales prices in the United Kingdom may lead to the replacement of “similar” and less expensive products from other countries. Another hypothesis could be the introduction of counterfeit or lower quality products – therefore sold at a more affordable price – and identified with names similar to the original ones. In other words, this could lead to favorable conditions for the marketing of fake made in Italy products with severe damage to the image and excellence of Italian production. According to some statements issued by some institutions of the United Kingdom, no duties are expected for the importation of Italian wines, however it should be noted that, at this moment of uncertainty, all forecasts and statements could be denied by the new agreements. In any case, it is difficult to imagine the United Kingdom will deprive itself of agricultural, food and wine products from the countries of the European Union, especially considering the long tradition of importation and appreciation. This would represent, at least, a drastic and radical change for many well-established habits, therefore it is foreseeable – as well as desirable – to define favorable and profitable agreements for both parties in order to avoid even worse consequences.