The UK has accounted for a major share of the world’s wine imports for centuries, and wine currently accounts for more than one-third of UK alcohol consumption. Its withdrawal from the European Union (Brexit) therefore will affect not only UK wine consumers, producers, traders, distributors and retailers but also suppliers of those imports.
A model of the world’s wine markets is used to indicate both domestic and foreign impacts of various alternative Brexit scenarios, which involve adjustments to UK and EU27 bilateral tariffs on wine imports and any changes to UK income growth and the value of the pound over the period of adjustment. The relative importance of each of those three components in three alternative Brexit shocks are reported, as are the impacts on bilateral wine trade values and volumes.
The results suggest the percentage impacts outside the UK will be minor compared with other developments in the world’s wine markets. Inside the UK, however, the effects of Brexit on incomes and the pound may well have a much more significant impact on the domestic wine market than changes in bilateral wine tariffs.