Will we be raising a glass to post Brexit reforms?

As in many elections, much was promised in the run up to the UK referendum to leave the European Union, which was almost unbelievably over 7 years ago in June 2016. Joy Shaw, Senior Tax Adviser, looks at the new reforms to the wine industry due to be introduced in January 2024.

The world has changed significantly since then:

• the Covid pandemic in 2019, that escalated in 2020 and which, continues to affect global health and economies today
• the UK leaving the EU with effect from 1 January 2021
• the world impact of Russia’s invasion of Ukraine in February 2022, and other conflicts around the world

All of these making for generally difficult trading conditions.

It is very difficult to be able to identify the stand-alone effects of Brexit on the UK Public and Businesses, in light of other factors.

The Rt Hon Mark Spencer MP, on behalf of DEFRA (Department for Environment, Food and Rural Affairs announced on 16 October 2023, some new reforms in the UK’s wine industry designed to drive investment, growth and jobs in the UK’s wine industry.

A few years back, running a vineyard in the UK may have been considered an act of optimism and possible folly in the face of the English unpredictable climate, however with Climate Change varying the crops that can be successfully farmed, and East Anglia at the forefront of affected areas with predicted wetter, milder Winters and dryer hotter Summers, more vineyards are being successfully run in Suffolk, and predominantly the South East of England.

The UK has for a long time been a global wine trading hub, the second largest importer in the world by value.

In the last five years England and Wales have seen a 74% increase in the hectarage of vines, and for the year 2022, production reports show a 36% increase.

The domestic winemaking sector in England and Wales is small, but growing rapidly and developing a global reputation for quality.

Under the Retained EU Law act, the government is permitted to set out reforms, intended to remove constraints on the economy, whilst ensuring high standards are not compromised.

This came about as a result of feedback from the wine industry that they felt that some specific regulations within the EU 400-page rule book had been stifling innovation and preventing the introduction of more efficient and sustainable practices.

The reforms to be introduced on 1 January 2024:

• Foil wraps and mushroom stoppers – ending the mandatory use of mushroom-shaped stopper and foil sheaths on sparkling wine, reducing unnecessary waste and packaging costs for consumers.
• Rules on bottle shapes – producers will be free to use different bottle shapes, ending rules on bottle shapes that had been seen as protectionist.
• Importer labelling – Only the Food Business Operator (FBO), responsible for the food information will need to be identified on packaging in line with other food products. Previously a unique UK label naming the importer was required.  The aim is to create frictionless trade and reduce administrative burdens.
• Hybrid grape varieties – To increase resilience in the face of climate change, and disease and to provide consumers with more choice, producers will be given the option to apply to protect designation of origin and geographical indications for wines produced using hybrid varieties of grapes.
• Blending Wines – although the blending of wines is a commonplace practice around the world, the blending of imported wines was banned in the UK. This reform will offer the scope to develop a wider variety of wines, as well as increasing consumer choice.
• Piquette – this is a lower-alcohol drink produced by rinsing the by-products of wine production, including grape skins and stalks, with water and fermenting the rinse. By allowing producers to make and market Piquette a new product income stream will open up for wine producers, from an otherwise waste product, in response to demand for lower-alcohol drinks.

Announcing his reforms the Food and Drink Minister Mark Spencer said:

“We have a diverse and dynamic wine sector here in the UK – but for too long our producers and traders have been held back by red tape inherited from the EU. The reforms we’ve announced today scrap outdated and burdensome rules so that our wineries, vineyards, and traders can continue to innovate and help grow our economy”. It remains to be seen whether this is the start of a meaningful package of reforms or is merely an ineffective tinkering of the rules.

Miles Beale, the Chief Executive of the UK’s Wine and Spirit Trade (WTS) Association said;

“We welcome the measures announced by the Government today, many of which the WTS has been calling for a number of years. Removing the restrictive rules on importer labelling will significantly reduce the post-Brexit impact of having to have a unique UK label. Moving to labelling Food Business Operator should allow one common label for both UK and EU markets, which will maintain the UK as an attractive destination market and support our aim for UK consumers to have access to the widest possible choice of wine from around the world. At a time when businesses are doing all they can to minimise packaging waste, changes to packaging rules will be good for business, the environment and consumers”

Initial Analysis of reaction to the Reforms

Of those consulted in advance of the changes, most felt that consolidating all UK wine regulations would be beneficial to them, in that it would be easier to follow one set of guidelines, with the advantage that this would reduce costs and administrative burdens for business.

This was also seen as an opportunity for the UK to adopt mutual acceptance of winemaking practices from countries outside of the EU.

Domestic producers felt that importers, exporters or re-exporters and large businesses are the categories most likely to make use of the changes.

Some of those consulted expressed concerns over wine labelling, the possible increase of poor-quality wine and confusion amongst consumers over the origin of wine, that may result in negative consumer confidence.

Will we be raising a glass in celebration?

It is good to see that the government is acting on it’s promises to reform EU legislation post-Brexit. It is clear from the DEFRA consultation on smarter regulations: wine reforms summary and government response issued on 13 October 2023, that this is the first step in a series of planned consultations and reforms to the industry.

With the reforms due to come in on 1 January 2024, it will not impact on our Christmas and New Year’s Eve celebrations 2023, but this time next year we may well see and feel the difference in the wine products available to us and the way in which they are presented to us.

For more information about the wine reforms, please get in touch with Joy by emailing hello@scruttonbland.co.uk or calling 0330 058 6559.