Brexit has caused shock waves and uncertainty across various industries around the world. But it could potentially be beneficial to Australia’s wine makers, the Ideal Wine Company has found.
Strong trade relationship
According to the Australian government, “Australia has a significant relationship with the UK underpinned by our shared heritage, common values, closely aligned strategic outlook and interests.” Data quoted by Business Insider in 2014 shows that the UK is Australia’s seventh largest two way trading partner, ranking ahead of the EU’s largest economy Germany.
Throughout recent years, British consumers have developed a taste for Australian wine. Official data suggests that the UK is the biggest export destination for wine produced in the land down under, by volume. Ideal Wine Company provides a selection of Australian wines, so we have seen first-hand how the country’s finest vintages are becoming increasingly popular with British wine enthusiasts.
Cutting wine tariffs
Producers believe that Brexit could make Australia’s UK wine trade even more profitable. National news agency ABC reports that Wine Australia (WA), the national industry body, has suggested that Brexit could make it less expensive for local wine-makers to sell their products in the UK.
At present, Australian wine-makers who export their bottles to the UK have to pay taxes called tariffs, while their European equivalents don’t, because the UK is part of the EU’s ‘single market.’ However WA argued that the tariffs may be discontinued when the UK departs the EU, making Australian bottles more cost-effective for UK consumers and generating more money for the industry.
Yet some producers, such as Larry Cherubino in Western Australia, are a bit more cautious. Commenting, he said: “We’re hoping that all these changes augur well for the Australian wine industry in terms of there being a more level playing field between us and the rest of Europe, but we really don’t know what the outcome is going to be.”
WA head Larry Jorgensen expressed similar sentiments. He argued that Australian wine producers will need to keep a close eye on the value of the British pound going forward. Adding further, Jorgensen said that “If it stays low for a period of time then that will affect our ability to be competitive… We live in hope, I mean we are farmers after all and we’ve got to be eternally optimistic.”
Striking favourable terms
It is hard to assess, at this point, whether Brexit will benefit the Australian wine industry. Australia will be required to negotiate new trade deals with both the UK and the EU over the next few years. The country’s government will need to strike favourable trade terms to capitalise on high British demand for Australian wine and ensure its producers benefit from Brexit.