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Decanter spoke with experts about how the decision to leave the E.U. could affect the global wine market.
This piece originally appeared on Decanter.com
An analyst for the London International Vintners Exchange believes the UK's vote to leave the European Union means a sudden end for the Bordeaux 2015 en primeur campaign, but there could be bargains available for opportunistic US buyers. Britain’s pound sterling plunged to record lows following the country’s surprise Brexit vote to leave the European Union (EU).
That EU referendum result could have significant ramifications for the fine wine market in the UK, effectively making it instantly more expensive for sterling buyers to purchase European wines.
Several economic analysts have also warned that the UK faces a fresh economic recession, which could itself damage consumer confidence across the wine sector at a time when wine consumption in the country had begun to recover. Most wine merchants supported a remain vote.
Brexit supporters have dismissed economic concerns as scaremongering. The FTSE 100 initially lost more than 8 percent of its value in early trading on Friday morning, and remained 5 percent down at 10:00 a.m. A first casualty of the Brexit vote could be the Bordeaux 2015 en primeur campaign in the UK.
"This probably puts an end to the en primeur campaign, although I suspect it was pretty much done anyway," said Justin Gibbs at Liv-ex, the London-based fine wine trading platform. "From a sterling point of view, it makes wines more expensive still."
There had already been some disquiet about Bordeaux 2015 price rises, with a weak sterling before the EU referendum adding more than 10% to release prices in the UK.
Liv-ex reported a burst of fine wine trading overnight as the Brexit votes were counted. This was predominantly from those based in Hong Kong, and also the US. Buyers in both of these markets could find deals with UK wine merchants in the coming weeks, if the pound sterling remains weak. "There was a lot of trade last night as currencies adjusted," Gibbs said.
"Dollar buyers could use this as an opportunity to accumulate wines," he said. But, he added that he expects the market to remain relatively quiet as investors in many sectors wait for the dust to settle. He also believes that the fine wine market is relatively resilient to shocks versus other sectors. "It’s a pretty steady ship," he said, adding, "clients" taste buds haven’t changed overnight."
Will Hargrove, of UK merchant Corney & Barrow, told Decanter.com that it will take time to know the full consequences of Brexit. "Clearly the uncertainly in the financial and currency markets is not something anyone likes. I feel it’ll be the autumn before we really know what the effects are likely to be."
On Bordeaux en primeur, he added, "Sadly, Bordeaux en primeur has largely become a broking exercise so I don’t see that the 2015’s will be affected as the wines are all released and the campaign pretty much over."
The UK’s wine trade body, the Wine & Spirit Trade Assoication, issued a statement this morning calling for calm among its members. Almost 100 percent of the WSTA membership had previously backed the UK remaning in the EU in a recent survey.
"The British public have voted to leave the EU, opening a new chapter in our history. While our members felt that the wine and spirit industry was stronger in the EU, we will work to assist government in preserving our access to the single market, supporting British drinks exports and agreeing the best possible international free trade agreements."