Drinks industry says 75cl bottle now costs £5.56 with champagne heading £1 higher courtesy of extra duty and rising import cost following Brexit vote

Wine lovers are suffering a Brexit-related hangover as the price of the average bottle has soared since the referendum to hit an all-time high of £5.56.

Prices have risen more in the first three months of the year than in the past two years, according to the drinks industry, which is warning of more increases ahead.

The average 75cl bottle topped £5.50 for the first time towards the end of last year, and hit £5.56 in the first quarter of 2017, according to the Wine and Spirit Trade Association (WSTA).

Miles Beale, its chief executive, said: “Unfortunately, for both British businesses and consumers, we are clear that this is not a one-off adjustment, but rather that wine prices will continue to rise.”

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The main culprit is the weak pound. The slide in sterling prompted by the shock referendum result has driven up the cost of imported goods, which has made food, drink and other everyday items more expensive. The pound has lost 11% against the euro since the Brexit vote. Despite a burgeoning domestic wine-growing industry, which produces about 5m bottles a year, almost all the wine sold in the UK is imported.

The WSTA said Brexit’s impact had led to a 3% increase in wine prices in the 12 weeks to 25 March, which compares with a 1% increase over the previous two years – 2015 to 2017.

For example, Bordeaux chateau owner Gavin Quinney has increased the price of his 2015 Trois Hectares Blanc to £11 from £9.95 last December.

For UK wine lovers there is worse to come. The 3.9% rise in alcohol duty announced by the chancellor in the spring budget, which took effect on 13 March, adds a further 8p to the average bottle if passed on in full by wine retailers. The WSTA had lobbied for a 2% cut in duty to help the industry.

Experts predict wine prices will continue to go up as the triple whammy of Brexit, rising inflation and duty increases take their toll.

Champagne drinkers face even bigger price increases. The WSTA predicted in February that the cost of an average-priced bottle of champagne would go up by 5% or £1 per bottle, while a bottle of prosecco would increase by 9%, adding a further 59p a bottle.

An alternative to imported wine is English and Welsh still and sparkling wine, which has gained increasing acclaim at home and abroad, although it tends to be more expensive. The small producers do not benefit from economies of scale such as those in other countries and have smaller yields because of the colder climate.

The industry body said the UK had done its best to absorb rising import costs after the referendum, but it was only a matter of time before any cushioning against a weaker pound ran out and they were forced to pass on costs to consumers.

Specialist wine retailer Naked Wines, owned by Majestic, upped the price of half of its wines by 5% last autumn, adding about 50p to some of its most popular wines, due to the weaker pound. Its chief executive, Rowan Gormley, told customers he would not “start a war with suppliers over price” or compromise on quality to hit profit margins.

Some larger retailers such as supermarkets have put pressure on their suppliers to absorb rising costs. The weak pound has proved a boon to some UK-based merchants of fine wines, who have enjoyed rising demand from dollar buyers in Asia and the US, according to industry title Decanter.

The WSTA has urged the government to ensure that Brexit does not turn UK ports into a “lorry park” with severe delays and gridlocks, which could prompt a resurgence of alcohol smugglers. Britain imports 1.8bn bottles of wine every year worth £2.8bn, including 1bn bottles from the EU (55%).

Beale said: “We all know that Brexit will be complicated, but something has got to give and government must start showing its support for the UK wine industry and the 275,000 jobs that our industry supports by tackling our excessive duty rates at the autumn budget.”

The sector employs 172,000 people directly, in wine shops, production, bottling and trade, and supports a further 105,000 in the supply chain.

More than half (56%) of what Brits paid for a bottle of wine in March, before the latest duty rise came into effect, went on alcohol duty (£2.16) and VAT (93p). Duty is even more for a bottle of sparkling wine, at £2.77.

By contrast, 14 countries in the EU have zero rates for wine. Only 21% of the price of a bottle of wine sold in France or Spain goes on tax, mainly VAT, and 19% in Germany.

But this has not put Brits off drinking wine. The UK accounts for nearly 15% of the world’s wine imports; it is the second-largest importer by volume (behind Germany) and by value (behind the US). It is the sixth-biggest market by consumption.



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