UK drinks sector celebrates FTA with Australia
UK wine and spirit businesses are celebrating the free trade agreement (FTA) with Australia, which is expected to reduce the cost for exporters and importers and will mean greater choice for UK consumers.
In 2020, the UK exported £27million worth of British gin to Australia, which was one of the few markets to continue growing during a year in which exports were heavily hit by the pandemic. UK distillers are expecting to see those exports continue to grow, with an agreement likely to remove the 5% tariff Australia levies on the spirit.
On top of good for UK spirits exports, an FTA should also see tariffs removed on wine imports from Australia. Wine is the largest agricultural export from Australia to the UK and in 2020 the equivalent of 230 million bottles were sold in UK shops and supermarkets, worth £1.5 billion in sales.
With 80% of Australian wine arriving in bulk, the trade supports a huge industry in the UK, from bottling plants and logistics networks to marketing and promotion services. Removing the tariffs and cutting unnecessary regulatory barriers will support a wide range of jobs across the UK’s wine industry.
The UK-Australia FTA will also provide tangible benefit to the UK’s 900 independent wine merchants and allow our famous hospitality sector to offer greater choice and better value to customers. Already one of the most diverse wine markets in the world, a good FTA will increase further the diversity and quality of wines available to UK consumers in an increasingly competitive market.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said: “The benefits of a tariff-free, quota-free UK-Australia trade deal are great news for British producers exporting English wine and spirts to Australia. It’s also good news for importers as it will enhance the UK as a global hub for wine trading, and will ultimately benefit UK consumers too.
“This historic announcement is well worth celebrating, with a glass of your favourite Australian wine! We hope further free trade deals with other countries are hot on its heels.”
Julian Dyer, Chief Operating Officer for Australian Vintage, said: “AVL is a strong supporter of the free trade deal with Australia, especially as both nations embark on our post-Covid economic recovery. There would be huge benefits to both the Australian wine industry and the British consumer.
“The deal will allow Australian business like ours to compete and innovate more successfully, which will ultimately reduce the cost and increase the number of higher-quality wines for British drinkers.”
Simon Lawson, General Manager of Casella Family brands, Australia’s largest family-owned wine company, said: “This deal is fantastic news which will further strengthen UK consumers love affair with Australian wine by removing unnecessary tariffs. As a family run business with an eye on the long term, this deal will renew our commitment to investing in the UK for our leading brand [yellow tail], our premium wines and our hub for the wider European market.”
More wine from Australia is sold in the UK than wine from any other country. 80% of Australian wine is shipped into the UK in giant containers and bottled in the UK’s bottling plants.
The UK is at the centre of the world’s wine trade, creating around 130,000 jobs across the supply chain, and is a major global trading hub thanks to our state-of-the-art facilities for wine sent here from around the world for onward shipment to the EU, northern Europe and across the northern hemisphere.
Prior to the deal Australian wine imported to the UK was subject to hefty tariffs which cost UK wine businesses an estimated £16 million. The tariffs plus VAT translate to an added burden of 10p to 11p per bottle, depending on ABV.
Re-exporting wine bottled in the UK means that total wine exports from the UK were worth £646 million in 2019, helping to explain why wine was the UK’s sixth largest food and drink export in that same year.
In 2019, total sales of Australian wine contributed £770m in duty and VAT to the Exchequer.
The Australian wine supply chain in the UK is extensive and supports jobs in bottling, logistics, marketing and across retail and hospitality. Removing tariff and non-tariff barriers and allowing greater space for innovation will support UK jobs, UK tax revenues and UK consumers.