David Williams 

Wine and the Brexit effect

A falling pound, rising inflation – time to stock up on wines from Chile and South Africa
  
  

Six of the best post-Brexit wines from Japan to Argentina.
Six of the best post-Brexit wines from Japan to Argentina. Photograph: Katherine Anne Rose/The Observer

There are at least two things that everyone can agree with on Brexit. First: nobody has any idea what’s going to happen next. Second: we can all share in the miserable certainty that, for the rest of our lives and quite possibly our children’s and grandchildren’s, Brexit will be the excuse or the explanation for most things that happen in the UK. Since 23 June, any crumb of positive economic data has been dredged up by Brexiteers to illustrate the falsehood of Project Doom, while every penny lost in the value of the pound is a little bit more proof for Remainers of the folly of leaving. The wine business has been as guilty of indulging in this pre-emptive blame game as anybody else.

Given this is a trade populated by Europhile food and drink lovers it will come as no surprise to learn which side they’re on. A tweet from Cardiff-based wine merchant Daniel Williams in February speaks for many: “The dust has settled, for those that voted for #brexit & #Trump I have just seen the real life effect on #wine pricing in spreadsheet form!” In other words, Brexit is to blame for a sharp upturn in prices that is only just being felt by suppliers, which is coming to a wine merchant near you very soon. The Wine and Spirit Trade Association, the trade body that represents the interests of the industry in the UK, has spelled this out in detail, putting a round figure on the cost of the Brexit vote on wine prices so far: 29p for a bottle from within the EU, and 22p for a bottle from outside. While not all retailers will pass the costs onto consumers – suppliers and producers will be expected to take at least some of the hit for as long as possible – the body’s chief executive Miles Beale said that Brexit was already damaging a trade worth £17.3 billion a year.

The increase in costs are a reflection of the 15% fall in the value of the pound, costs that are in many cases only being felt in the first few months of 2017 because importers have now exhausted the supply of currency they’d secured at favourable pre-referendum rates. But if the pound’s devaluation was a direct result of the Brexit vote, I’m not sure that it does wine’s majority of Remainers much good to overplay its effects. As one importer, Nik Darlington of Red Squirrel Wines, has pointed out in a recent article in his firm’s Nutkin magazine, “a self-inflicted currency squeeze doesn’t change the fact that currency fluctuation is an occupational hazard” in a trade dominated by imports to the tune of 99% (of which 55% are from the EU). “Exchange rates come and they go,” says Darlington.

Still it’s very hard, even for the most zealous Leavers, to build a case for Brexit having anything other than an inflationary effect on wine prices for the foreseeable future. With the exception of Chile (whose wines currently have tariff-free access to the EU thanks to a free-trade deal), and to a certain extent South Africa (which has a quota agreement where around a third of its exports to the EU enter duty-free), New World wines would feel relatively cheaper should we leave the EU without negotiating a deal. This is because they would no longer be subject to the common customs tariff. However, this amounts to 7-12p a bottle, so it’s not going to make a huge difference. And in any case it assumes we’ll have free-trade deals with Australia et al ready for the moment we leave the EU.

Neither should we expect the burgeoning, but still tiny, English wine scene to pick up the slack, even if some Brexiteers have suggested they’d be free to cash in on terms no longer protected by EU legislation by labelling their wines as English “Champagne” or “Burgundy”. Already one of the more expensive places to make wine in the world, southern England won’t be getting any cheaper if producers no longer have tariff-free access to specialist European winemaking equipment. Besides, as the always perceptive American wine economist Mike Veseth has suggested, those tariffs could soon be dwarfed by another plausible Brexit by-product. What better, more politically acceptable way for a cash-strapped British government to pay for expensive divorce proceedings than raise the duty on the liberal elite’s stereotypical drink of choice?

Six of the best post-Brexit wines

Hill-Smith Estate Chardonnay, Eden Valley, Australia 2015 (£10.99, Waitrose)
If you thought post Brexit-vote price rises only applied to European wines, think again: when I tasted it before Christmas, this rich but agile modern Aussie chardonnay was £10. Even with that extra £1 it’s still very good value: try it with (non-imported) roast pork.

Vondeling Petit Blanc, Voor-Pardeberg, South Africa 2015 (from £7.90, cambridgewine.com; redsquirrelwine.com)
Partly thanks to a historically weak currency, partly to a duty-free quota system with the EU, South Africa has been making some of the best-value dry whites available in the UK for years. Post-Brexit, this chenin blanc-based blend’s irresistible bright Cox’s apple tanginess will continue to shine.

Tesco Finest Central Otago Pinot Noir, New Zealand 2015 (£12.50, Tesco)
New Zealand (pop. 4.5million) is a top target for a free-trade deal once we’ve left the EU (pop. 510 million). We’ll be sending them more jam; firms such as the ever-reliable Villa Maria will be sending us more of this svelte, silky, red-fruited pinot to match with presumably tariff-free Kiwi lamb.

Michael Klouda Wines Mourvèdre, Lodi, California, USA 2014 (from £17.75, leaandsandeman.co.uk)
It may be scant consolation to Remainers, but should Donald Trump make good on his promise to deliver a free-trade deal with the UK, it could bring down the price of gorgeous new-wave Californians such as this wonderfully fluent, sweetly spicy Rhône Ranger.

Doña Paula Estate Malbec, Mendoza, Argentina 2015 (from £8.49, htfwines.co.uk;etonvintners.com; halifaxwinecompany.com)
Unlike neighbouring Chile, Argentinian wines are subject to the EU’s CCT levy, which in theory might make them cheaper once we’ve left the EU. Not that this textbook, young malbec, with its juicy, subtly herby, ripe red and black cherry fruit, isn’t worth every penny right now.

Grace Winery Koshu Kayagatake,Yamanashi, Japan 2015 (from £16.29, strictlywine.co.uk; viaderwines.co.uk)
If, as Brexiteers promise, the Brexit vote was about forging a new “Global Britain”, then we should expect many more bottles to arrive from outside the vinous mainstream. We’ll see. But if we get more of the gossamer soft, subtle, sushi-friendly dry whites made from Japan’s koshu grape it would be no bad thing.

 

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