As the UK digests the fallout from Brexit, a lot of wine writers and industry experts have started thinking about what it means us wine-o’s and our drinking habits. One of the most immediate effects is that the British Pound is being annihilated on the FX markets, and anything imported into the country is getting pricey. Are the days of the £5 bottle of wine numbered? And if so, should we really mourn their loss?
Margins in the “value” end of wine are seriously skinny. Once all the taxes, duty, transport costs are factored in, the retail margins are tiny, and the price of production is somewhere in the region of 30p a bottle. It doesn’t take too much of a shift in the exchange rate, or a potential EU tariff, before something has to give.
Is this change going to happen overnight? Most of the big bulk wine buyers are well prepared. If you import in bulk from other countries then you have to hedge your exchange rate. You use financial instruments to set an exchange rate for up to 12 months in advance. That gives a lot of wiggle room. Some companies even demand their contracts in GBP instead of EUR, and sign up producers to long term deals that guarantee a supply despite the market moves. Your Southern Italian Pinot Grigio is safe for a while yet!
But if it does change, where’s the problem? I don’t think I’m being snobby in saying that readily available alcohol at cut-prices is not the best thing for society. In the same way the 2 for £5 chickens that were terrible for animal welfare and for consumers to eat have been phased out, how long before the same happens with alcohol? Both Ireland and Scotland are debating to introduce minimum alcohol prices, is that so desperately wrong?
I was a “remainer”. I was so for environmental, social, and economic reasons. But if one up side of the Leave campaign is the death rattle for cheap and environmentally disasterous wine for the masses, then I’m not going to cry about that too much.