Oh dear. Seems you have been drinking from a half full glass this Christmas?
Well, it’s hard to hop, skip and jump into the new year considering the 12 months we have just had. If you created one of those word clouds to describe how businesses of all sizes felt about 2018, then arguably the most prominent, underlined and bolded out for maximum effect, would have been “uncertainty”. Time and again industry leaders, from whatever sector you could think of, complained it was the “uncertainty” of doing business in 2018 that was dominating every decision they made and holding them back going into 2019.
First week into the new year and you’re straight back into Brexit.
When it comes to talking about business and what is likely to be in store for the year ahead, it’s impossible not to start, and end, with Brexit. Particularly as we have now entered the final quarter of the great Brexit countdown. That “uncertainty” will ratcheted even more as we await the fate of the nation and quite how the UK will finally leave the European Union on March 29 - even if we leave or not is uncertain. The UK wine industry has been stuck in this Brexit no man’s land, struggling to know how our ports, transport and customs systems are going to cope if we crash out of the EU without a deal. The fact government ministers and Treasury officials went into their Christmas recess with serious talk of a so called “managed no deal” propped up with emergency contingency funding stretching to billions of pounds, would have had the collective wine trade reaching for the port with even more gusto over the festive period.
“The first half of 2019 looks set to be one of the biggest business rollercoasters we have ever been on if our politicians can’t be trusted to sort out the Brexit impasse. ”
Sounds like we need to carry on drinking the port then.
Indeed. The first half of 2019 looks set to be one of the biggest business rollercoasters we have ever been on if our politicians can’t be trusted to sort out the Brexit impasse. The only good news is at least, eventually, we will all know where we stand come March 29, 2019. There will finally be certainty to all those months of uncertainty, even if it means Article 50 ends up being extended and the proverbial Brexit can is kicked further down the road.
So what can the wine industry do?
In stark terms, prepare for the worst and the big unknown of a no deal. That means having enough stock on this side of the Channel to keep doing business for as long as possible after March 29. It also means having enough affordable currency hedged and stashed away to pay for it. It means talking to and working with producer partners, both within the EU and around the world, to strike longer term supply deals that will ensure they can carry on doing business well after March 29. It will require understanding and co-operation on both sides of the negotiating table. This is not the time for short term gains.
But the wine trade is always saying this is the worst possible time and then finds a way to make things work.
Yes, to some extent it does, it’s just the Brexit uncertainty is having an impact on so many factors outside its control. Just look at how the average consumer is behaving. Spending is down across the board not helped by the fact our collective real annual wages have not kept up with inflation. So although actual wages are rising faster than they have done for a decade, research by the Institute for Fiscal Studies shows real annual wages, when inflation is not taken into account, are £800 lower than they were 10 years ago. Not the combination you want it you are a retailer, restaurant or drinks importer trying to buy and sell as discretionary a product as wine.
We are now into Dry January as hundreds of thousands of people give up the booze. Many have already done so all year round, or cut back on their drinking to such an extent that the wine sector is operating in an overall declining rather than growing market. Which is good news for the Wine & Spirit Trade Association when it is going into the Treasury to bat for a duty reduction, but very bad news if your commercial future relies on people drinking and buying more wine.
So what’s to be done?
Well, we’re not going to solve all the wine industry’s problems here and now. All we can do is look after ourselves and ensure we are doing all we can, as individuals or as businesses, to make our wine offer as exciting, relevant and affordable as we can. Yes, the next few months are going to be tough, but there are still more than enough people out there who want to drink and discover great wines. It might end up with fewer businesses where they can buy those wines from, but that’s still good news for the companies that stand out and are successful. Brexit or no Brexit.