Brexit knocks French wine exports to UK
The weak pound may force British wine merchants out of business
The fall in the pound following the UK’s vote for Brexit will be, wine commentators have tended to agree, good for the English wine industry — a cheaper pound means more exports.
There has been less attention paid to what weaker sterling means for French producers, whose second-biggest export market has become that much more expensive to sell into.
Figures from 2016 give some weight to this fear that French exports will fall. The French wine industry’s FEVS export federation said exports fell 0.8 per cent to €7.9bn, “mainly due to the impact of the pound sterling [fall] on champagne sales in the United Kingdom”. The pound has lost 14 per cent against the euro since before the June 2016 referendum.
“The French are being remarkably complacent about the situation,” says Jason Yapp, managing director of independent wine merchants Yapp Bros, which deals particularly with producers in the Rhône, the Loire and the Languedoc. “I think it’s a disaster. Only two producers we deal with have made concessions on price as a result of the currency devaluation.”
Mr Yapp believes that French wine is going to become up to 25 per cent more expensive in the next 12-18 months. “Some British merchants are going to go to the wall as French producers look for other export markets” that can afford their prices, he says. “We at Yapps are digging in for a long siege.”
Christian Seely, managing director of AXA Millésimes, which owns eminent Bordeaux estates including Château Pichon-Baron, is more phlegmatic.
“Generally I just think it needs to be considered in the context of the very long trading history of wine between Bordeaux and London,” he says. “This existed for centuries before the European Union was ever thought of.”
While he concedes that the fall in the value of sterling since Brexit means that wines from Bordeaux are at the moment more expensive to British wine drinkers than before, Mr Seely points out that “sterling has fluctuated up and down against the French currency many times in the past and it has not stopped the British drinking the wines of Bordeaux, nor will it now.”
At the more expensive end of the market, with the wines that collectors “must have”, there is likely to be the least change: producers will not budge on price and consumers can afford them. Wine brokers and top-end restaurants in the UK report healthy sales to Asian and Russian consumers taking advantage of sterling’s fall.
In the mid-market, merchants have been trading on stocks that were bought some time ago at keen prices, but these will soon be exhausted. When it comes to repurchasing, they will find that producers have not dropped their prices, even though sterling has fallen. If the French do not lower prices, British merchants may look elsewhere, the merchants say.
If British consumers start to trade down from Bordeaux, Burgundy and champagne, producers in the Rhône and the Languedoc may see the benefit. Mr Yapp says that this is already happening. They may also look even further afield to Australia.
Will Hargrove, head of fine wine at merchants Corney & Barrow, is not convinced the French are too troubled.
“It might be harder to hit certain price points in the everyday bracket, and that will mean more competition from outside France and even Europe, but on the flip side the exchange hasn’t been great for some time and the competition has been there for a while now. I believe French producers will take the view that the UK remains a key market and that, as long as quality remains high, there will be demand.”