A flood of EU wine could hit the UK, post-Brexit, because EU wine subsidies to promote wine exports in (non-EU) third countries now include the UK, according to industry figures in Spain. More promotional money may also become available.
In anticipation of the Brexit start of date of March 29th, the UK was earlier this year added to the list of Group 1 (Key EU wine export market) countries in the EU’s Common Market Organisation (CMO) wine support subsidies programme for the promotion of wine exports to third countries, explained Exitalia, an international wine export consultancy company based in Albacete, Spain.
Wine companies, regional bodies and associations can apply for the EU’s four-year CMO subsidy programme on an annual basis; however Exitalia pointed out that subsidies awarded for Group 1 markets could be switched from other markets to the UK during the course of each year.
“Already in anticipation of Brexit, 10% of our wine company clients have opted to receive CMO subsidies for the UK market,” said Silvia Hernandez, International Consultant Manager at Exitalia.
“If and when Brexit starts, all of 30 of our wine company clients with CMO export subsidies will switch to the UK market during the year of subsidy which ends in April 2020,” Hernandez explained, adding that Spanish wine companies already operating the UK market could also benefit from CMO subsidies. “There will be a surge of promotional activity in the UK, post-Brexit.”
EU wine industry lobbying group the CEEV (The European Wine Companies Committee) said the budget allocation for EU CMO subsidies between 2019 to 2023 period would reach €1.1 bn, a slightly higher sum than the amount allocated between 2014 and 2018.
Italy, France and Spain take up most of the CMO budget for promotional activity with Italy allocated more than €500m over four years.
A spokesman from the European Commission’s Agriculture unit declined to comment on CMO subsidies in relation to the UK.
EU wine to flood UK post-Brexit
The EU’s CMO programme provides 50% of funding for commercial activities including trade missions, tastings, event and relevant employee costs.
The programme typically attracts larger wine companies who have to fund the other 50% of the subsidy. Rather than applying for CMO subsidies, 16 smaller wine companies including Vinos del Viento opted to promote their wines for export to the UK at the Wines from Spain annual tasting held on March 7th in London.
“There is going to be a deluge of EU wine hitting the UK once Brexit occurs, so I am trying to get ahead of the curve,” said Michael Cooper, a wine producer from California, who owns the Vinos del Viento wine company in Aragon, Spain.
Rafael del Rey, director of the OEMV Spain’s Wine Market Observatory told Meininger’s that Spanish wine companies and regional bodies were able to tap into more than €50m of the EU’s CMO subsidies each year. “Italy and France have even more funding, but I expect more Spanish wine companies will take up CMO subsidies once Brexit comes into force."
Marianne Rodriguez, assistant director of Foods and Wine of Spain within the Spain’s official commercial office in the Spanish Embassy in London said big wines companies benefitting from CMO subsidies, were likely to switch to the UK, as it is a key growing market for Spanish wine exports.
A leading wine industry PR company in London who wished not to be named, confirmed that several companies had assessed CMO subsidies for the UK market.
However it played down the impact of any increase in promotional activity in the UK, saying that Spanish wine companies remained concerned over the uncertainty surrounding Brexit and its impact on wines sales in the UK as result of prices hikes, tax rates, the possibility of tariffs as well as logistical and administrative hurdles.
Hernandez however, said a switch to the UK post-Brexit, could have the same result of exports to Switzerland.
“Rather than exporting to long-distance markets, many Spanish wine companies prefer to be in key markets closer to Spain, like the UK, to save costs. Switzerland as a non-EU country is where Spanish companies have had good returns and this could be the same for the UK,” she said.