"Things may slowly get worse"

Meininger’s tracks the impact of Brexit upon the wine industry in a two-part series. In the first part of our Brexit series, we take a closer look at how UK importers and retailers face the grim realities of Brexit and at the easing the abandonment of VI-1 forms bring.

A story by L.M. Archer.

Shipping Warehouse / Credit: Liv-Ex
Shipping Warehouse / Credit: Liv-Ex

Award-winning Wales importer Daniel Lambert of Daniel Lambert Wines spent over five months navigating the new alphabet-soup of Brexit regulations prior to Britain’s split from the UK on 1 January 2021. Lambert even stockpiled enough inventory to weather a possible “rocky” January.

He wasn’t alone. “Liv-ex prepared as best as it could by making the most of existing techno-logy,” says Ashley Hopkins, director of operations and technology for Liv-ex (London Inter-national Vintners Exchange). “However, because the Brexit deal was not finalised until Christmas Eve, it meant that a significant number of late nights were required to finalise everything in time for 1 January.”

Unfortunately, no amount of hopeful preparation prevented the brutal blow of Brexit.

 


Wales importer Daniel Lambert (mi.) of Daniel Lambert Wines / Credit: IWT

 

“Brexit has had an impact on Corney & Barrow, of course, logistically and financially,” says Rebecca Palmer, associate director and head of commercial buying for 240-year old Corney & Barrow, one of the UK’s oldest independent wine merchants. “And the two are linked of course: the act of getting our wine from A to B is more expensive – in time and actual cash and both for our European suppliers and for C&B – than it was before the Brexit transition period came to a close.”

 

More Hoops

Pre-Brexit, trading wine totaled about eight steps from start to finish. Post-Brexit, traders now navigate twice as many. For suppliers, this includes issuing a commercial export invoice and wine import certificate for each consignment per producer.

Suppliers must also obtain an EORI number (unique export number) to export goods from the EU. Freight forwarding may fall to either the supplier or the buyer. To avoid added ex-port/import documentation and cost liabilities, many UK importers seek FCA (Free Carrier Agreements) requiring the producer to pay them.

Meanwhile, buyers complete import declarations, create an UK EAD (Export Accompanying Document), and pay all import CCT (Common Customs Tariff) taxes.

“We required roughly 200 pages of documents [pre-Brexit] to move an average Liv-ex shipment (~ 600-800 wines) between the UK and EU,” says Hopkins. “However, since 1 Ja-nuary, that multiplied significantly. The original 200 pages are still required, but now a similar sized export will require additional documents (like import declarations), resulting in around 800 pages.”

 

Turmoil, Time, Taxes

Brexit’s toll in turmoil, time and taxes continues. “Before Brexit, producers in Europe could send us samples easily, without incurring charges,” says Parker. “Now, the process is more complicated.” This includes border checks, possible spoiled samples, and new import taxes.

Additionally, HGV (heavy goods vehicles) driver shortages – aggravated by pandemic testing shortfalls – contribute to shipping and border delays. 
Moreover, glitches in the cumbersome forty-year old HMRC (Her Majesty’s Revenue & Customs) CHIEF (Customs Handling of Import & Export Freight) computer system halts business before it starts, with no customer service hotline to help users.

“So, we exported our first export to Jersey, which should be really straightforward, really,” explains Lambert. “But we had nothing but problems with CHIEF.” This included several days deciphering coding, responding to unfamiliar compliance violations, and possible fines.

 


Rebecca Palmer, associate director and head of commercial buying Corney & Barrow / Credit: Tom Gold

 

Nightmare Averted?

Ultimately, the average cost for Brexit paperwork adds €120-€150 per shipment, regardless the size. It costs the same to ship one case or 1000 – disastrous for small producers. This trick-les down to consumers, who end up paying around €1.16-€1.74 more per bottle.

Adding to expenses, anyone importing organic wine to the UK must register as an organic importer, effective January 2022. Another fee. Prior to Brexit, wineries handled certification. Furthermore, buyers must bottle all non-UK wines with importer labels, beginning October 2022.

But the UK government did avert one nightmare. On 26 July 2021, it scrapped the dreaded VI-1 form, due to commence 1 January 2022, which required expensive enological lab tests certifying EU compliance. WSTA estimates the VI-1 form would add costs of about €383 per shipment.

“This is a truly historic moment for the UK’s world-leading wine trade,” extolled Miles Beale, Chief Executive of the Wine and Spirit Trade Association. “We have spent more than two years campaigning relentlessly to avoid the introduction of new import certificates for EU wine imports on the one hand, and scrapping the unnecessary and costly VI-1 wine paperwork for on-EU wine imports on the other. The first would have cost the UK wine industry some £70m [annually], reduced consumer choice and bumped up prices. The second will increase those savings to over £100 million. It’s a truly fantastic outcome.”

”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,”” added James Miles, Chairman and Managing Direc-tor (Co-Founder) at Liv-ex & WSTA Board Member. “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. “ 

“The VI-1 achievement is epic,” concludes Daniel Lambert, the infamous importer whose viral tweets humanized the VI-1 struggle, “This will change the face of the UK wine industry, and the EU is now chasing the ball. But the government could have done this months ago.”

L.M. Archer

Second part: Post-Brexit and the wine producers

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