The impact of Brexit will make life harder for the on-trade – but not impossible
Brexit continues to dominate both news and dinner tables, as we get closer to finding out what it all means for us individually and our businesses. I have friends and relations who hold the full range of views from upset remainers to jubilant outers, although I admit I need to leave London to hear the latter.
There is, however, no such diversity within the wine trade. We seem to regard it universally as a Two Act disaster.
Act One is upon us in the form of a weakened pound. The FTSE 100 (mostly exporters) may be buoyant, but we import nearly all the wine we drink, which means higher prices.
Unlike Tesco, who were happy to run out of Marmite in their pricing dispute with Unilever, very few of us are in a position to tell our suppliers that we are not accepting their exceptional mid-year increases. Nor should we; they need to make money just as we do.
Clever buyers will study the currency situation carefully and act accordingly. The overseas ones have already been piling into our fine wines. Priced in sterling and bought with pounds pre-Brexit they are a bargain to those with other currencies.
As these cases are exhausted and UK suppliers have to go back to Europe to re-stock, prices will inevitably rise – and quickly. If classic European wines are your establishment’s thing, I would buy as much as the accountants will let you now.
At the nadir of the financial crisis in 2008, the pound might have dipped lower against the Euro than it is now, but back then it recovered, whereas the current level looks set to stay for a while.
Against the US dollar, too, the pound is over 10% lower. So again, I’d be stocking up on all those lovely new-wave Californians before my suppliers have to reorder. Bear in mind, too, during the next list review, that, since your high-volume Argentinean Malbec is also likely to be bought in dollars, it might need to be substituted for a lower-quality one if the selling price cannot be changed.
Act Two is potentially both costlier and more scary. The extra work needed to navigate the paperwork generated by dealing with dozens of different European wine-producing countries is daunting. That, though, is some way off and a subject for another column.
Having said all that, I do not believe that we should wallow in negativity. The UK’s diverse, mature market is its strength. As one region or grape becomes too difficult to sell there are others in a queue waiting to take their place on your list.
The on-trade consumes vast amounts of wine and this is not something that’s about to change. Our job is to find the right bottles, keep calm and sell wine.