At ProWein in Düsseldorf, Philip Cox, commercial director and co-owner of Cramele Recaș, situated in Timiș County, Western Romania, discussed the impact of Rishi Sunak’s contentious alterations to the alcohol duty system on the wine industry.
Cox highlighted how the changes prompted adjustments in how their wines are crafted for the UK market.
Cox noted a particular demand among British consumers for their Pinot Noir, but acknowledged recent shifts towards promoting local varieties in off-trade and rosé in on-trade channels. Plans are underway to expand their range at Majestic with a new premium Pinot Noir, despite the challenges encountered in the UK market in recent years.
Regarding Brexit, Cox explained that while it necessitated efforts to diversify into mainland Europe markets, the UK remains significant albeit diminished, representing 20% of their export sales compared to 80% previously. He cited the additional bureaucracy of non-EU trade as a challenge but emphasized that the UK’s most significant blow came from the revised alcohol duty system.
The revised system, introduced during Sunak's tenure as Chancellor, simplifies the taxation structure but increases rates based on alcohol content, significantly impacting wine prices. Cox criticized these changes for discouraging wine consumption among British consumers and creating operational hurdles for European producers like Cramele Recaș.
In response, Cramele Recaș has adapted by focusing on producing lower-alcohol wines tailored for the UK market, such as their Pinot Grigio for Tesco and rosés reduced to 11% ABV to mitigate tax impacts. Cox highlighted the stark difference in duty rates between wines under 11% ABV and those between 11.5% and 14.5% ABV, underscoring the financial implications for producers and consumers alike.
Adjusting alcohol levels involves early grape harvesting, a complex task across their extensive vineyards. Cox acknowledged the stylistic benefits for whites and rosés but recognized limitations for reds due to ripening requirements. He compared this strategy to practices used by Southern Hemisphere producers, where adjustments are simpler due to climatic conditions.
Looking ahead, Cox expressed uncertainty about future governmental actions and the longevity of the duty freeze announced by Chancellor Jeremy Hunt. He speculated on potential shifts pending the outcome of future elections, highlighting the industry’s apprehension over regulatory stability.
As discussions continue within the wine industry, Cox concluded cautiously, unsure whether upcoming governmental changes will lead to revisions in the alcohol duty system, a pivotal issue affecting the landscape of UK wine imports and consumer affordability.
Source: The Drinks Business