Wine prices rising still further in the UK

Since the vote in June 2016 for the UK to exit the European Union, wine prices have been on the rise. And in summer 2017, there seems to be no let up in these price increases.

According to recent figures released by the Wine & Spirit Trade Association (WSTA), price rises are only going to get worse.

To what extent are wine prices rising in the UK?

Average price up by 4%

Between the Chancellor’s Budget announcement in March 2017 and 17 June 2017, the average price of a bottle of wine rose to £5.58. This is an increase of 4% on 2016’s prices for a bottle of wine in the UK, according to the WSTA.

The information released by the WSTA came at the same time of the first reading by Parliament of the Brexit ‘divorce bill’ that would shift EU laws into UK legislation.

Already up in 2016

Average prices for wine had already exceeded the £5.50 per bottle mark for the first time ever in the last quarter of 2016. And, the WTSA warns that the whole industry, including fine and premium wines, are facing a “triple whammy” of pricing pressures going into Autumn 2017.

The WTSA said at its annual conference on 12 September: “For the first time we can see the how prices have been affected by the triple whammy resulting from Brexit’s impact on the pound, rising inflation and the 3.9% inflationary duty rise on alcohol imposed by the Chancellor at his Budget in March.”

Autumn budget looms

The WTSA also warns that the Autumn Budget is likely to see alcohol duty rise yet again by inflation. They have called on the government to have a period without tax rises.

A YouGov poll commissioned by the WSTA clearly shows the concern levels by consumers about the ever -increasing cost of food and drink. It found that four out of five respondents to the poll were worried about the prospect of paying higher prices in this sector.

However, the WTSA also says that it is “committed to working with the government in order to achieve the best possible deal in Brexit negotiations.” What this will mean for the wine industry is yet to be seen.

How is Brexit affecting wine prices?

According to the Wine & Spirit Trade Association (WSTA), the leading wine industry group in the UK, wine prices are very much on the rise. They also warn of more price rises to come, thanks to the fallout from the Brexit vote in June 2016.

Is Brexit impacting wine prices?

Average prices

The average price for a bottle of wine rose above £5.50 for the first time at the end of Q4 2016. That’s a price increase of three per cent and ended up setting the price at £5.51 as we moved into the first quarter of 2017. And, as we reach the end of Q2 this year, the average price of a bottle of wine has moved again to £5.56.

It’s likely that major retailers will absorb some of the costs somewhere in the supply chain, but even that can’t stop the price rises being passed onto the consumer, says the WSTA.

Wine importers, restaurants, bars and wine merchants are all feeling the pressure of increased costs across the board.

The Brexit effect

As for the top end of the market, we’re still waiting for data to show how much the changing economic climate following Brexit has affected the prices. We do know, however, that Bordeaux 2016 en primeur wines have been affected by steep price rises. Due to a weak sterling, anything Bordeaux merchants release costs about 10 to 15 per cent more in the UK when compared to the 2015 release.

Some merchants based in the UK have found that they have had increased demand from buyers that use dollars. For example, there have been more orders from Asian buyers, and from those in the US. But, restocking from Europe has, of course, become more expensive.

The WSTA are keen to pressure the government regarding duty tax and to make sure than English ports are protected if and when the UK leaves the EU customs union. It remains to be seen whether their pressure has had any results.

Miles Beale, CEO of the WSTA said: “Last year the WSTA predicted that Brexit and the fall in the value of the pound, compounded by rising inflation, would force the UK wine industry to up their prices. Sadly, this is now a reality as an average priced bottle of wine in the UK is at an all-time high.’