Perspectives: How Brexit affects European businesses

After more than four years of debate and negotiations, the UK left the EU trading bloc on January 1st 2021. James Lawrence asks European wine producers if they are ready to trade under new terms.

How Brexit affects European businesses
Brexit affects European businesses / Credit: donfiore - Fotolia

Jose Urtasun – co-owner of Rioja winery Remirez de Ganuza

"Personally I would have loved the UK to remain in the EU, but once this was not possible, I believe that the new agreement is actually very positive. It is very important that we have an agreement because uncertainty can be even more harmful than new conditions, whatever they are. For the last five years I have witnessed a lot of fear in the UK wine industry; importers were not adding new wineries to their portfolio, stocks where kept to minimum, many people where waiting to make decisions until the situation was more clear. At least now we have some clarity.

However, the costs of exporting to the UK will rise and administrative requirements will give us a harder time than before – nevertheless, we will manage. Also it is important that the OCM program that the EU provides to help wineries export, will become available to exporters to the UK. Unfortunately, there is the possibility that the prices of our wines will rise in the UK market. Yet this is a difficult thing to predict, as we need more time to fully understand the consequences of the new situation. In my opinion the currency fluctuation between the pound and euro will be a key factor in determining whether prices rises or not. Other than currency fluctuation, I don’t see any reasons for substantial price rises.

Therefore, I remain optimistic. We export to around 35 countries in the world, many of them outside of the EU. Some of our strongest markets like China, US and Mexico are not in Europe. We will always remain committed to the UK market, because in the fine wine market chain, both extremes of the chain are very important. In one extreme we have the producer, in this case Remírez de Ganuza, and in the other extreme consumers. As I said, there are a lot of knowledgeable consumers in the UK that demand the greatest wines of the world. That demand is driven by knowledge and taste, it's cultural and can not be stopped by bureaucratic, political or taxation changes. In 2020, our exports to the UK grew – this is despite not having an official importer. The future is bright, even if the UK is outside of the EU."

 

Paul Kiefer – Sales Director at Mayer am Pfarrplatz, Vienna

"After two years of great uncertainty, we can plan for the future.  Over the last few years we have had several discussions with importers who were interested in wines from Vienna. All of them were very careful and were reluctant to work with a new winery from the European Union before the Brexit negotiations were completed. I think the new situation will help both parties to plan and forecast. We are more than happy about the agreement. So far we can't see a big barrier which could affect our trading relationship badly. We should remember that the UK is and will be in the future one of the most important wine markets in the world. It will be definitely a key market for us even after Brexit. I do not anticipate price rises – I imagine they will be stable."

 

Richard Jones – Director, Reh Kendermann UK

"Reh Kendermann is heavily involved in the UK market, having had its own marketing company Reh Kendermann UK ltd for the last 28 years. In addition, we invested in the fine wine distributor Yapp Brother Ltd five years ago – more recently we invested in the fast growing distributor North South Wines Ltd over the past year. The performance of all three companies has been very strong in 2020 and we are very optimistic we can grow our business further, despite the added complications of the trade between the EU and the UK.
The facts are: Reh Kendermann is by far the largest exporter of wine from Germany to the UK and the UK is our most important export market. Our firm has been planning how to manage its business with the UK for several years and has managed to develop our systems in such a way that there will be zero disruption to our business. However, we were extremely relieved that the EU and UK managed to come to a very late trade agreement, as the addition of CCT would have put significant pressure on all wine businesses and led to cost inflation. The dropping of VI 1 documents for the EU in favour of simplified export documentation was also a blessing to larger companies and a major relief to smaller producers; the additional costs would have made shipping smaller parcels of wines nonviable.
Looking ahead to 2021, our major branded business with Black Tower, Kendermanns and our own label business with the major retailers will not be overly effected. This is because our shipments tend to be full containers and often of one wine, the additional costs of documentation and bureaucracy is likely to add a few pence per bottle.
Nevertheless, we do have concerns, at least in the short term. These revolve around  the shipping process in terms of availability of containers and drivers and the ability of the channel ports on both sides to deal with the significant flow of trade between the EU and the UK. The time it will take for shipments will be extended and we can inevitably expect some small cost increases. Yet we are confident that our business will continue to be strong, the consumer demand for our brands continues to grow and our significant commitment to marketing investment and sales resources will further support this dynamic."
 

For full access...

Please log in or register now»               No subscription?  Try out our free 14 day trial»

Latest Articles