Wine officials prepare ground for post-Brexit trade
New Zealand wine officials have been talking with their United Kingdom counterparts to steer a new trade path following the Brexit vote.
New Zealand Winegrowers chief executive Philip Gregan said preliminary discussions had been held with the Wine and Spirit Trade Association (WTSA), which represents over 300 companies producing, importing, exporting, transporting and selling wines and spirits in the UK.
Gregan said Association CEO Mike Beale had been in New Zealand to attend the annual Romeo Bragato conference last month in Blenheim.
“We had originally invited him to speak on something different but we changed that to discussions on trade prospects,” Gregan said.
After the United States, the UK is the second largest market for New Zealand wine, worth $380 million a year. The EU including the UK buys $520m worth of New Zealand wine.
But besides being a large importer and consumer, the UK is a crucial hub to re-export wines to the EU and beyond. Of all New Zealand wine exported to the EU, 76 per cent by volume and 77 per cent by value arrives in the UK first.
Beale said the WTSA had already started on model trade agreements for wines and spirits that could become global blueprints post-Brexit.
“We have no intention of idly waiting around for Brexit to happen, we have to take action now. We hope the UK government will welcome our initiative,” Beale told his association’s annual conference this week.
Even though the UK is a significant market for New Zealand, analysts have recently suggested that after the Brexit vote, officials here would do well to focus on developing other markets.
This was partly because with their economy slowing and the value of the pound falling, the British would have less disposable income to spend on wine.
New Zealand Institute of Economic Research deputy chief executive John Ballingall said it would be a mistake for New Zealand to turn its back on the UK.
“We shouldn’t overstate the impact of Brexit on exports. It’s a well established market with long standing relationships, they like our wine and there won’t be any significant changes for a few years over access.”
He agreed that slowing income growth in the UK might have an impact, but not a great one.
It made sense to redirect any surplus elsewhere in the event the UK market slowed.
Ballingall said the WTSA was keen to put together a high quality trade agreement with its New Zealand counterparts, but the effort should not be restricted just to wine.
“New Zealand and the UK are very pro-free trade agreements so we could help by putting a high quality FTA in front of them. Whether New Zealand would be top of the UK priority list is uncertain.”
It was also unknown whether the UK would remain as a hub for New Zealand wine in the way it is now, once it had exited out of the EU.
“But I don’t expect it will be very different because it’s in everyone’s best interests to have open markets,” Ballingall said.
Exports of UK spirits to both Australia and New Zealand were worth $255m in 2015, a figure which has more than doubled since 2010.
Beale said, while the UK could not formally negotiate with the New Zealand and Australian governments yet, the industry could prepare most of the ground in advance.
WSTA had commissioned a poll showing 86 per cent wanted a free trade deal with the EU and 87 per cent wanted a free trade deal with non-EU countries. The polling had “resounding” cross-party support with the exception of UK Independence Party.