Breaking industry news does not normally happen on a Sunday afternoon, but just as many in the trade might have been thinking about what bottle of wine to open for Sunday lunch, news broke that would have got many reaching for a bottle of fizz to celebrate the surprise government u-turn that it was to scrap completely its intention to introduce what the wine sector saw as expensive and dangerous VI-1 forms on future wine imports from the EU. The Buyer looks back on the efforts made by so many in the wine industry, driven by the Wine & Spirit Trade Association, to stand up to Whitehall bureaucracy which showed how strong the sector can be when it has the support of all its influential leaders and a sympathetic ear in the financial and business press.
The scrapping of VI-1 forms has been welcomed by an industry already struggling to cope with post-Brexit supply chain and distribution issues and the on-going fall out from Covid-19 trading restrictions.
“Cutting this needless red tape will place our businesses in a stronger position internationally, as they continue to grow.” Now who do you think said that in the last 24 hours? Miles Beale, chief executive of the Wine & Spirit Trade Association? Michael Saunders, managing director of Bibendum and chair of the WSTA?
No. That’s the actual UK food and drinks minister, Victoria Prentis, declaring the policy that she and the government have been backing since the EU referendum was actually completely “needless” and if introduced, using the same logic as her quote, would have put businesses in a weaker position internationally if introduced.
By “weaker” what we really mean, according to the WSTA, is bringing “wine imports from the EU to a standstill” and costing the UK wine industry a minimum of £70 million in the first year alone. It would also, said the WSTA, added at least 13p to the average bottle of wine. By deciding to throw not just VI-1 forms in the nearest Whitehall dustbin, but all wine import certificates from around the world, it will result in savings of at least £100m, claimed the WSTA.
Not surprisingly Beale was delighted by the news. “This is a truly historic moment for the UK’s world-leading wine trade,” he said.
It’s also a major lobbying coup for the WSTA that has driven the wine industry’s wider efforts to make the government first listen, and crucially understand, its concerns and take action to stop what Prentice has finally agreed is “needless red tape” on top of what are already proving to be arduous form filling and delays in importing wine from the EU post-Brexit.
“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,” added Beale.
(Here’s Miles Beale talking to The Buyer in January after the announcement that the introduction of VI-1 forms was to be delayed)
But how did we even get to this ridiculous situation of a government minister agreeing with the lobbyists against her proposed policy?
It has long been known that the threat of VI-1 forms was not just being proposed for trade reasons, but was thought to be a tactical part of the overall Brexit negotiating position. A useful bargaining chip to be used considering how important EU wine imports to the UK are – a cool £2.2 billion.
It was ironic that the UK government was so keen to continue with VI-1 forms post-Brexit considering they were devised by the EU as a way to protect its own wines against cheaper wine imports from the rest of the world
But with Brexit done, and a deal completed was there really any need for the government to continue with the idea of imposing the same EU VI-1 forms, that would have needed a laboratory analysis of every wine shipment from the EU, no matter how small on UK businesses looking to trade with Europe? An analysis the industry estimated would have cost £330 for every wine shipment. A sum that would have meant it would simply be unviable for buyers, merchants, retailers and distributors to import a vast number of EU wines.
It’s not clear what finally make Prentice and her team re-think their VI-1 strategy, but there have certainly been a growing number of dissenting campaigning voices for them to listen to over the last couple years.
It’s not all come from the UK either. Philip Cox, co-owner of Cramele Recas, Romania’s largest wine exporting producers who has does considerable business in the UK, has been writing on The Buyer for the last 18 months about how potentially damaging VI-1 forms would be.
As he explained in this article in February 2020 on The Buyer VI-1 forms were an “existential threat” to those importing “multiple products in small quantities” where “a shipment of two pallets of 20 different wines, with maybe two-to-three batch/lot codes of each wine could end up easily having 25-30 VI1 documents at €45 euro a pop plus administration costs”.
He added at the time: “VI-1 certificates are something the whole trade should fight against – both EU producers and UK traders…So, get out and do something. Support Miles Beale and the WSTA, or your local wine producers organisations to lobby against this.”
Industry wide and fine wine support
Even though the final decision over whether to introduce VI-1 forms was delayed at the beginning of the year from its initial start day of July 1 by six months, it did not allay the industry’s fears that this issue was not going to return.
So much so that over 50 business leaders from right across the wine industry took the unusual step of signing an open letter, drafted by Liberty Wines’ David Gleave, to Victoria Prentis in February setting out exactly why the VI-1 form would be so damaging to the sector. You can read the letter and who signed it here. In it they warn “many producers, especially those whose wines are in high demand internationally, will divert shipments away from the UK”.
But, crucially, the letter was written in a co-operative tone. Hard in setting out the facts, but also open to a mutually beneficial resolution. Here’s how it concluded: “It was an oft-stated objective of this government to reduce the amount of bureaucracy UK businesses had to deal with when we left the EU. This provides you with an opportunity to do just that, and to help our industry to survive in what are very challenging times.”
The fine wine sector has also had a crucial part to play. In fact you know this really is an issue to be concerned about if the fine wine merchants are up in arms about it – for they usually sit outside the rough and tumble of wine lobbying and are significant in their absence as traditional members of the WSTA.
Not this time round. The fact VI-1 forms potentially meant any sale of fine wine, be it a bottle, a case or pallet would have to be opened up, sampled and tested was even more of an “existential threat” to the UK fine wine industry. If VI-1 forms were introduced it would overnight remove the UK’s status as being the most important and influential fine wine market in the world.
That was the claim made and repeated to great effect and impact by the fine wine’s champion James Miles, co-founder of Liv-ex. He has over the last year been the fine wine sector’s leading voice, working with the WSTA to help its lobbying efforts and make it clear to the government just how damaging the forms would be for UK’s position in world markets.
He said earlier in the year: “Prior to leaving the EU a typical shipment for Liv-ex would require a document that ran to 200 pages – which seemed excessive. But today, for the same single shipment, the paperwork runs to 800 pages. The import form will add at least 200 more. Every shipment has effectively become a production of War and Peace. That is obviously ludicrous.”
At last year’s WSTA’s digital conference he said: “These rules are not taking back control, but shooting ourselves in our foot. They are not being forced on us by the EU. They are being forced on us by our own government. It’s completely bonkers.” But again he was also keen to work with the government to find a solution. “This is all achievable with the right political will,” he said. “It’s all in the gift of this government. We need to focus on the opportunity here. We want to make trading as easy as possible.”
His reaction to the government climbdown shows how serious the situation was for fine wine: “I cannot overstate how important today’s announcement is to the UK wine industry…By removing these unnecessary and costly non-tariff barriers to trade [the government] has re-set our trading arrangements with the rest of the world in a way that that will enhance the UK’s leading position in the global wine trade.”
Independent wine merchants were also galvanised to take action, with many joining forces or signing up to the WSTA for the first time to see what practical support they could give. It was very much the actions they took on the ground, writing to their local MPs and sharing their stories with the local media that helped keep the momentum going.
They were able to personalise a templated letter from the WSTA to set out their case to their local MP in these strong words: “The introduction of VI-1 certificates will hit independent wine merchants like mine particularly hard precisely because our USP tends to be heavily dependent on providing an offering from small EU producers. The cost and hassle of unfamiliar and additional forms will put off many small EU producers, who will simply not bother sending their wine to the UK a result, meaning reduced choice.”
The drip, drip effect of MP after MP standing up in Westminster or writing to the Minister taking up the cause of their constituent, as they are duty bound to do, is an effective lobbying tool providing enough members of the trade are motivated enough to write a letter in the first place. This was an issue on which independent wine merchants were determined to play their part.
Hal Wilson of Cambridge Wine Merchants was also part of a trade delegation that gave evidence to the All-party Parliamentary Group for Wines and Spirits where he was able to explain how VI-1 form would cost his business over £110,000 alone.
The Lambert effect
(Daniel Lambert explaining the issues of VI-1 and Brexit red tape on the wine industry in an interview with The Buyer earlier in the year)
Then there was the single handed actions of wine importer Daniel Lambert. He took to Twitter to set out in a series of tweets just how damaging VI-1 forms would be not just on the UK wine sector, but the choice of wines available for people to enjoy. His series of weekly tweets went viral, resulting in millions of views, shares and likes and multiple appearances on national TV and radio.
It was through the personal experiences, passions and emotions of Lambert that a complicated dry issue of what is essentially an administrative form really came to the fore.
He shared his experiences in an extensive interview on The Buyer where he spelt out how important it was for everyone in the trade to take action. “It’s got to be all aspects of the trade saying this is catastrophic of what is going on. Groupage is now dead…unless you want to pay quite a lot of money for it. That is catastrophic for independents,” he says. “Small growers are just not going to do it, it’s as simple as that,” he added.
“It’s absolute political bullshit that is going on. The wine trade is being used as a bargaining chip for these VI-1s,” he says.
The FT that won it
Well perhaps not the Financial Times on it own, but the fact the VI-1 form issue got caught up in the serious and financial business press reports on the damaging overall impact of Brexit certainly helped the wine industry’s cause.
The Financial Times, in particular, has been crucial in setting out the industry’s arguments, which, again is where the role of the fine wine merchants, was particularly important. This was part of industry that the FT knew its readers would be personally affected by and was willing to give the time and space to fine wine merchants to make their case. They even gave over a priceless double page spread to the damaging impact of VI-1 forms which would have no doubt made it into the ministerial red box of Victoria Prentice.
It was noticeable that Sunday’s announcement that VI-1 forms were to be scrapped was first picked up with a report in the FT. Which again gave space Lambert to share his views:
“The government spent the past seven months digging a deeper and deeper hole for itself by pretending the industry wanted VI-1s to maintain quality,” he said. “I really don’t know why because this is the first real identifiable Brexit dividend . . . this really is huge for the wine trade,”
Final word to WSTA
However the government’s u-turn came about it is undoubtedly down to the combined efforts of multiple influence all chipping away at a government department that ran out of answers. But ultimate praise has to go to Miles Beale and his team of carefully selected experts at the WSTA, many of whom have, like Beale himself, come from many years experience working in the senior civil service and know how government works and what it takes to get ministers to listen – and change their minds.
As Beale says: “It is heartening to know that the government trust the WSTA’s advice and are listening to the concerns of business, particularly SMEs. This is a major win for wine lovers and the UK wine industry. I am sure corks will be popping across the globe in celebration of this most welcome news.”