French wine trade stockpiling in preparation for Brexit
France has increased wine shipments to the UK by 30% as distributors stockpile cases in preparation for the fallout from Brexit.
DRN caught up with Julie Poirot, deputy agricultural counsellor at the French Embassy in London, on stage at an Agile Media event called Think France yesterday.
We discussed France’s preparations for Brexit, issues surround FX, confidence in the UK market and the existence of Nathalie Loiseau’s cat.
The French wine industry is taking precautions to ensure minimal disruption of supply to the UK while fears around movement of goods and tariffs abound, and overstocking in volume commonplace.
“In the wine sector, it’s quite different to other agricultural sectors,” said Poirot, who was born and raised in the heart of the Burgundy region. “People have the possibility of stockpiling, which is an easy way to face the first weeks of uncertainty. We have seen a lot of increases of shipments to the UK recently. In January we saw a 30% increase of shipments to the UK of wine and 50% increase in shipments of Champagne, so I just hope we will have a very good occasion to celebrate something, whatever it is, and to drink all that wine that is stocked right now in the UK.”
Revoking Article 50 and deciding to remain in the UK would provide the greatest cause for celebration among the UK wine trade, as our extensive industry surveys show that more than 90% vehemently oppose Brexit.
Yet the industry remains in the dark about what will happen, as does the French Embassy.
“We were a little bit astonished by Brexit,” said Poirot. “People thought it would not happen. Now we are on March 26 and we don’t know what’s going to happen. People have started to prepare for the worst, because that’s the easiest thing to do. If there is a no deal Brexit, we know the rules on both sides. There is a broad range of possibilities between [the UK] staying in the EU and a no deal Brexit, and we still don’t know which one will be implemented.
“From the administration and government point of view, we have held a lot of information meetings about Brexit. We have created a website called Brexit.gov.fr, with a lot of information about customs for the wine sector and other sectors. Still we are waiting for a clear decision from the UK government to really know what’s going to happen on April 12 or May 22.”
Some producers may fear that French wine will become unaffordable for many Brits if the value of the pound goes down significantly against the euro as a result of Brexit, and insurance against FX risk could be important for vignerons. Yet Poirot is convinced that French producers will find a way to maintain a strong trading relationship with the UK.
“The UK is our second largest market for French wine and it’s our fourth market for spirits, so it’s very, very important for us,” she said. “There is also a special relationship between France and the UK, because France is also the biggest [consumer] of Scotch whisky.
“Whether there will be a Brexit or not, or how or what kind of Brexit it is going to be, there will still be very strong relationships between our two countries regarding wine and spirits.
“We export French wines all over the world, to Asia, to North America. Of course it’s much easier to export French wines within the European Union and it’s easy with the UK, but this sector is used to dealing with the fluctuation of the currencies.
“Since the referendum there has been a decrease in the value of the pound, but this is something that the sector is used to dealing with in other markets. There is some insurance against currency fluctuation, but businesses are going to adapt.
“It might be difficult for a few weeks, and that’s where insurance can be useful, but stockpiling is another thing businesses can do to prepare themselves for any kind of Brexit. Businesses will find a way. We are still going to sell French wines in the UK, because you’re not one of our first export markets by chance, you are our closest neighbour, and I think British people really love French wines, so it’s not going to disappear.
“Of course, we are concerned about tariffs that could be offered to other countries like New Zealand and Australia. We know that there are very few agricultural attaches based in London and the two new ones are from New Zealand and Australia. We know that they are ready for this change, but I think we can manage that, because we export to the UK some quality wines that people are used to and really enjoy.”
Loiseau, France’s Europe Minister, has reportedly named her cat Brexit – because he is indecisive and reluctant to leave. “He wakes me up every morning miaowing to death because he wants to go out, and then when I open the door he stays in the middle, undecided, and then gives me evil looks when I put him out,” she said.
Yet Poirot was keen to reassure the wine trade that France still has confidence in the UK market. “She doesn’t have a cat,” she said. “It’s just a silly joke about Brexit.
“I think there is still confidence in the UK. Brexit is a challenge that businesses are facing, but it is manageable, because of the quality of our products. Having talked to the federation of French exporters of wine, we are still confident about the UK remaining one of our biggest markets.
“We have a lot of French importers based in the UK market, we have the connection, you are still just next door, and it’s much easier for us than for New Zealand and Australia, who are on the other side of the globe. We have some quality products. Brexit is a challenge, but it’s manageable.”