On the 31st of January, Britain’s EU membership was finally severed, and with it many business’ easy-going relationship with cross-channel commerce. For Goedhuis & Co, with our penchant for French wine and merry road trips through the Cote de Beaune, this was always likely to be a daunting time with so many fond and vital relationships with Chateaux, producers, negociants and clients in mainland Europe.
Our biggest concern, however, has been ensuring our clients’ routes to exceptional wine have remained smooth in the face of such upheaval. To get to the bottom of what Brexit will mean to Goedhuis, our clients and the wine trade in general, we spoke with our resident expert, Associate Finance Director and Company Secretary, Dan Lane, to shed some light on the ins and outs of what Brexit really means for our clients.
Over Teams, he describes a fast-moving process fraught with pitfalls and moving goalposts. “Prior to the Brexit deadline we moved all available purchases into the UK, as well as significantly bolstering our Selection List stocks to cover any import delays.
“What became evident fairly quickly was that the UK Government were taking a step back from the existing EU systems approach and reverting to a Red Tape method of moving goods.”
He talks about concerns each shipment would be swamped in mountains of paperwork, hiked tariffs and the introduction of the controversial VI-1 form.
Dan explains that as the Goedhuis team parted ways for a short Christmas break all that could be done had been, with nothing left to do but pour a large glass, hold our breath and brace for the possibility of a no deal.
“On Christmas Eve 2020 we were informed a trade deal had been reached with the EU and this would be in place in eight days’ time on the 1st January 2021. The VI-1 form requirement had been pushed back by 6 months, as had the customs tariffs and it was confirmed there would be no restrictions on the quantity of goods that could be moved between us. Hurrah!”
Despite the good news, challenges remained; most disruptive was the last-minute nature of the deal, “We had already decided to suspend all exports to the EU in January and as we had shipped most available wine into the UK by mid-December 2020, including every case from the 2018 Burgundy En Primeur campaign, also suspended imports while the dust settled.”
After a month’s hiatus, at the end of January Goedhuis tentatively shipped its first consignment, -- around 3,500 bottles -- to the UK from France.
But these early successes are not the end of the battle. Dan warns several hurdles remain, with many of the impacts of Brexit filtering down to consumers. Each consignment from the EU is likely to come at around an additional £150-250 higher than before. While expensive orders will absorb this cost easily, cheaper bottles are likely to bear the brunt with retailers forced to ship larger quantities to soak up costs -- a policy Goedhuis is striving for to ensure our drinking wines maintain their prices as closely as possible.
Dan explains that, day to day, the process of moving wine into Goedhuis’ bonded warehouse in Wiltshire is currently more challenging than it has ever been. “Wine seems to have been used as a bargaining chip in the Brexit negotiations which has made it incredibly difficult to plan effectively.
“We commend the way that both the WSTA and Liv-ex constantly lobbied government, released press statements and communicated with the trade, fighting the cause of all UK wine merchants and retailers.”
But despite these challenges, it is not all doom and gloom. Dan discusses how the health of the trade has instilled a positive mindset amongst the Goedhuis team and the industry in general, “There is still a very strong demand for European wines and Europe does not want to see the amount of wine sold in the UK to decrease.”
As a result of these changes, one trend expected to become more common is heightened purchasing from the UK market, nominally through “Agents who represent a range of suppliers across the globe where you can purchase the wine in GBP and the stock is physical in the UK,” says Dan. “There will also be a greater move towards the broking of clients’ older vintages of wines that already lie in bond within the UK, wines that are ready to drink and are UK based.” This is good news for collectors, who are unlikely to see significant change in availability of fine wines.
Moving forward, despite clear challenges facing the industry, optimism around the delivery of top wines to the UK remains high, with the transport of goods likely to become smoother with every trip, as we strive to ensure disruption to our clients remains as low as possible -- blockages in the Suez Canal aside, of course.
“One last thought,” says Dan, “Brexit bureaucracy will mean that just 5% of a £6 bottle of wine a consumer buys refers to the cost of the actual wine within it. It is more like 30% in a £10 bottle of wine, meaning the wine is of a much higher quality. Perhaps drinking less, but better, is a Brexit consequence?”