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Report from MPs’ warns red tape will cause chaos and price hikes for wine

Created: 22 September, 2020

A new report from a committee of MPs shines a light on the impact to UK wine businesses of the government’s new red tape requirements, which will push up the price of wine for consumers and cause “chaos” for the wine industry.

Following an inquiry into the impact of introducing new wine import requirements, the All Party Parliamentary Group for Wine and Spirits has today published a report in which UK wine companies have spelled out the cost to consumer and businesses of a series of new inspections and paperwork proposed – voluntarily – by the UK government, and which will be required for wine imported from the EU from 1 January next year.

If Government refuses to scrap plans to introduce wine import certificates (so-called VI-1s) and lab tests, experts warn that businesses could fold, or be forced to relocate outside the UK. Job losses are inevitable, and the Treasury will lose tax revenue.

Worried UK wine firms gave or submitted pages of evidence to the inquiry citing a catalogue of concerns.

The report comes in the same week as an amendment from Lord Holmes of Richmond to the Agriculture Bill, which calls for a Government review into the requirement for VI-1 forms and calls for a revolutionising electronic alternative for any necessary information.

In the report, Direct Wines stated that the introduction of VI-1’s would “be chaos” for all those companies buying and selling European wines which are unfamiliar with VI-1s and lab tests. A spokesman said as part of the inquiry: “For those suppliers who were trying to be proactive and work out what to do, they are getting little to no information from their own Customs officers”.

Liv-Ex, a leading global trader in fine wines, gave evidence stating: “This is going to be unbelievably difficult to implement, Liv-Ex alone will have to produce at least 15,000 forms. 600,000 or more forms are going to be produced.

Fine wine merchants have told MPs it will be impossible for them to meet the testing requirements – which would mean opening and thereby ruining expensive bottles of wine – and  remain competitive, which will inevitably result in businesses having to relocate from the UK to avoid using the forms.

As well as the huge cost to wine businesses– estimated to be over £70 million a year – there will be a big reduction in range and choice.

One independent wine merchant said: “UK customers have become accustomed to being able to buy the food and drink, they like, from all over the world. If they are suddenly unable to buy major brands from Bordeaux, Champagne, Rioja, Prosecco, I think they are going to be very unhappy”.

Other wine businesses stressed that this was opportunity for Government to move forward rather than take a step back.

Chainvine, experts in digital systems, said: “The Government should declare a “War on Paper.” it is wasteful, unsustainable, and in the long term not resilient as Covid-19 has shown us.”

The report concluded that the introduction of import certificates for EU wine, something that isn’t required of any other category of alcoholic drink, will add further time and costs, which will ultimately fall to the consumer, with no demonstrable benefit.

MPs were told it would push up the price of the nation’s favourite alcoholic drink and reduce the range of wines offered to the UK’s 33 million wine drinkers.

Last year the WSTA warned that the new inspections for imported EU wine would generate over 600,000 customs forms which is anticipated to treble the workload of UK wine inspectors overnight.

On top of this the report concludes that VI-1 forms will damage the UK bottling industry and could hinder the growth of the English Sparkling wine industry.

Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said: 

“The APPG report on VI-1s lays bare the disastrous impact these costly and unnecessary tests and paperwork will have on British business and the UK’s 33 million wine consumers.

“Sadly Defra Ministers are stubbornly ploughing ahead with the introduction of costly VI-1 certification for EU wines, meaning that at the end of the year wine drinkers will be facing price hikes and inevitably find that some of their favourite European wines will vanish from the shelves.

“It’s madness! More than half our wine comes from Europe. Instead of choosing to suspend and reduce red tape and costs for wine, Ministers have elected to apply additional burden and some £100m in costs for UK businesses and consumers. And with no idea where the lab testing capacity will come from.

“Deal or no deal – it is within Government’s gift to reverse this decision. It is baffling why the politicians seem hell bent on pushing up prices for British consumers and punishing British business.”

Neil Coyle MP, APPG Co-Chair said:

“Wine import certificates were designed by the European Union to make importing wine from outside the EU more difficult. The UK is the second largest importer of wine, by volume and by value, in the world. About 99% of wine consumed in the UK is imported and it makes no sense for the UK Government to retain or extend these costs. This would contradict the Government’s claim of opening up the country to world trade and would hit consumers and our economy.”

Helen Grant MP, APPG Co-Chair said: 

“The United Kingdom is an important world wine hub with generations of experience, the largest bottling warehouse in Europe, and hosting a world leading fine wine trade. I hope officials will consider our recommendations and remove barriers to trade, incorporate new technology and reduce bureaucracy.”

Lord Holmes of Richmond, said:  

“My amendment not only seeks to highlight the potential damage the introduction of VI-1 forms would cause to the UK wine industry, but also help show the major opportunity we have to revolutionise the way the UK wine industry operates outside the EU, boosting our technology business’ and put the UK at the forefront of innovation in moving goods.”

Please click here to access the report.

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