DP12109 | UK and global wine markets by 2025, and implications of Brexit

Publication Date

06/20/2017

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Abstract

The UK has accounted for a major share of the world’s wine imports for centuries, and wine accounts for more than one-third of UK alcohol consumption. It is therefore not surprising that both suppliers of those imports and UK wine consumers, producers, traders, distributors, and retailers are focusing on what the UK’s planned withdrawal from the European Union (Brexit) might mean for them. In this paper a model of the world’s wine markets is used to project those markets to 2025 without, and then with, Brexit. The Brexit scenarios involve adjustment not just to UK and EU27 bilateral tariffs but also to assumed changes to UK’s income growth and currency. The relative importance of each of those three components of the shock are reported, as are impacts on bilateral wine trade values and volumes for still and sparkling wines. The results suggest the impact outside the UK will be very minor compared with other developments in the world’s wine markets. Inside the UK, however, the effect of Brexit on incomes and the pound are likely to have non-trivial impacts on the domestic wine market, and to be far larger than just the direct impact of changes in bilateral tariffs.