Romanian winery owner warns of unforseen Brexit challenges for EU producers
A leading Romanian winery owner has warned that most EU producers trading with the UK have no idea what the real implications of Brexit are.
Philip Cox, owner of Crameles Recas told The Buyer there is “clearly no upside for our industry” and went on to highlight the key changes that this unprecedented event will have on the wine sector at the end of the transition period which officially ends on 31st December.
EU suppliers will no longer be able to use the web-based EMCS system when shipping wine to the UK, and instead will have to go to their local customs office and complete lengthy forms which then need to be sent to the UK importer or customs agent before the goods arrive, a much slower and more expensive system.
“Trucks will need to be physically checked and undergo much more complicated customs procedure,” said Cox.
Another change that will be ushered in with Brexit is VAT will need to be paid in full at the port of entry to the UK before trucks can be waved through, creating possible cash flow issues.
Wines will also need to be labeled with the full address of the UK importer, regardless of quantities purchased, which is not the case on wines shipped within the EU.
“This is very bad for people shipping fine wines and small quantities of any wine,” noted Cox.
Assuming the UK negotiates a free trade deal with the EU, another change will mean that every imported wine will need to have a certificate of preferential option, which Cox describes as entailing “a lot of work”. It means a supplier is required to get proof for each and every ingredient of the wine as to the country of origin, and only EU origin will qualify for getting tariff free trade. Cox claimed it took him the work of two people for two months to complete this process for a recent shipment to Korea, estimating that even in countries where labour is cheap, it would still cost around 500 Euros to do this for each wine.
The introduction of VI1 documents, which consist of an analysis which has to be carried out in an official lab, and a food safety verification which needs to be done by a government inspector, is a change described by Cox as “the most damaging, difficult and expensive of the lot”. He emphasized that these documents apply to “every batch of every wine on every delivery to the UK, forever.”
In his case, that entailed sending samples off to the only official lab in Romania 500 km away by courier at a cost of €20, paying €25 euro per analysis of each batch/wine (bottling on different days warrants separate documents), waiting two weeks for it to come back, then taking it to an inspector 75 km away to get it stamped, plus paying somebody to administer the entire process and ensure all the paperwork is checked in due time for each delivery.
He conceded that while this may not be an issue for suppliers sending large volumes to a supermarket, for small importers of multiple products in small quantities, Cox said the VI1 forms posed an “existential threat”.
"For example a shipment of two pallets of 20 different wines, with maybe two-to-three batch/lot codes of each wine could end up easily having 25-30 VI1 documents at €45 euro a pop plus administration costs," he said.
Cox estimated that all these costs would “probably” add around three to five cents per bottle, which he said was “significant” on wines selling for under £6. “For smaller producers it will be much worse, and effectively means small shipments of mixed wines will become very near impossible, particularly for reasonably priced wines.”