Wine merchant, Nik Darlington of Red Squirrel Wine, gives his view on what the Brexit vote means for his business and other independent wine merchants supplying the on-trade.
Red Squirrel Wines’ Nik Darlington
Sterling’s fall is mightily inconvenient, particularly if you deal in US dollars, but unless we fall to parity with the euro then things will soon stabilise. The underlying weakness of the eurozone economies, vis-à-vis the relative underlying strength of Britain’s, will I think see the euro taking a bigger hammering in the medium term, so mitigating sterling’s woes.
To paraphrase clumsily William Boyd, exchange rates come and go, the true test is how we weather these inevitable gaps. The trade ought to be prepared as possible for all but the most apocalyptic currency swings. The fact this is self-inflicted doesn’t change that.
The real and lasting concern is structural. As Britain amputates itself from the EU, what happens to the supply chain? It is now pretty straightforward moving wine duty-suspended throughout the EU. It is actually pretty straightforward importing to the UK from elsewhere, but with additional paperwork and third party tariffs.
Ordinary merchants or smaller importers don’t tend to see the nitty-gritty, as it’s handled by freight forwarders and bonds. If the amputation of Britain from the EU means more red tape (as we await these new bilateral trade deals we’re all promised), then we could begin to see systemic cost increases throughout the system.
Unlike currency shocks, which hit everyone in the trade more or less equally, this will affect smaller merchants more than the big companies, who have the resources and knowledge to deal with it better.
Will our producers still want to send their wine to the UK? Of course they will. Everyone may grumble about how fixated the British wine drinker is on price, but it remains the most open and dynamic marketplace for wine in the world. I’ve had nothing but messages of support from our growers all over the world. Some gibes by Australians, but I think they’re just sore about the rugby.
And crucially, whatever one does in the UK wine trade, we work in a confidence business. We didn’t get the result most of us wanted, we didn’t get the result I wanted, but we need to accept it, keep our heads up and plough on.
If we get all maudlin about it, and indeed if business and industry does generally, then confidence plummets and we’ll talk ourselves into another recession.
Like Napoleon said, drink Champagne in victory, drink Champagne in defeat. Half the country wants to drink to console themselves, the other half to drink to celebrate.
We have a pretty resilient wine trade in this country. The world’s finest. Let’s not allow this vote to change that one bit.
