Spanish vineyards are making sure British tipplers are well stocked with Rioja by shipping as much wine as they can ahead of a potential hard Brexit.
“We already completed our sales for the first half of 2019 with 90% of our customers,” said Santiago Frias, general director of Bodegas Riojanas, a vineyard in Cenicero in the wine-growing region of Rioja. “This will allow us to face the first collapse we expect in UK customs.”
The Spanish Wine Federation, the country’s industry association, has been advising members on how to minimize the impact of the UK possibly crashing out of the European Union with no deal. Steps that vineyards can take to offset the pain of a hard Brexit include hedging against a fluctuating pound, making advance plans for transportation and ensuring that wines are correctly labeled, according to a circular to members dated January 17.
Steps that vineyards can take to offset the pain of a hard Brexit include hedging against a fluctuating pound and making advance plans for transportation
About 350 kilometers (217 miles) north of the Spanish capital, La Rioja is the largest of the European wine-exporting regions in terms of volume shipped to the UK. In the first nine months of 2018, its wineries sold 32 million liters, one third of their global exports, to the British market, according to data from the Spanish Wine Market Observatory, known as OEMV.
Many Spanish vineyards are planning to increase their stocks in the UK, a trend that could drive up transportation and warehousing costs, according the wine federation’s circular.
In fact, Rioja vineyards have already been feeling the pinch from Brexit as the weak pound hits UK demand for Spanish vino. Exports to the UK fell as much as 16% in the first 11 months of 2018, a decline steeper than the 10% slide in shipments to all markets, according to Grupo Rioja, an association grouping together most of the region’s wineries.
“By all means we can talk about a Brexit effect,” said Inigo Torres, Grupo Rioja’s manager. “Of course it could get worse in case of no deal. Sterling would further depreciate and the UK would turn into a third country with no customs agreement and probably higher duties. And that would amplify the negative effect.”
Some Rioja winemakers are reacting to the Brexit threat by seeking to boost shipments to other markets. Baron de Ley SA is developing new export markets including Russia, Canada and Brazil, said Chairman Eduardo Santos-Ruiz in an interview.
“There’s not a lot we can do about Brexit,” he said. “But we are already opening new markets as part of our export policy.”