Accolade Wines – 2022 Comments on the Australia Trade Bill
The comments made by Accolade Wines on 15 January 2022.
Dear Chair,
Re: Response to International Trade Committee Inquiry – United Kingdom-Australia Free Trade Agreement [UK-AU FTA]
I write in reference to the Committee’s inquiry on the Government’s FTA with Australia as part of the parliamentary scrutiny process.
As you know from our engagement in recent years, Accolade Wines is a leading global wine company and proudly one of the largest wine and perry companies in the UK. Our portfolio includes some of the world’s most recognised and cherished wine brands, such as Hardys, the largest wine brand in the UK off-trade, and many others.
While Australian products contribute significantly to Accolade Wines’ portfolio, our products extend beyond New World wines to include iconic non-wine brands such as Stone’s Ginger Wine and Lambrini. The company’s capabilities span a complex and international supply chain from wine supply and production, to sales, marketing and distribution, with an emphasis on quality, innovation and sustainability.
Over the last three years, Accolade Wines has been heavily engaged in various consultations and discussions on the UK-AU FTA, including with your office, the Secretary of State for International Trade and President of the Board of Trade, the Minister of State for Trade Policy, and officials across Whitehall. We also continue to be engaged with officials on various trade-related matters following the UK’s withdrawal from the EU.
As a globally integrated alcohol company, Accolade Wines maintains its position on the benefits of the European Single Market, and the UK’s withdrawal from the EU continues to cause the industry challenges. I recognise these issues have been discussed by the Committee at various points. Notwithstanding the obstacles posed by Brexit, we support the Government’s agenda to secure FTAs with other countries, and the company will continue to encourage the wine sector to contribute its voice to consultations on other bilateral and multilateral trade negotiations in the future.
Accolade Wines in the UK
While remaining rooted in its Australian heritage, the UK is a key strategic market for the company, its largest by value and a significant source of revenue. Accolade Wines has invested heavily in establishing its presence in the UK over many decades, creating jobs directly and across the supply chain.
As you are aware, our UK facilities provide an important base from which the company can supply customers across Scotland, England, Wales, Northern Ireland, the Republic of Ireland and mainland Europe. Accolade Wines also has a significant presence across the UK supply chain and through our European headquarters in Weybridge.
Accolade Wines’ UK footprint includes:
The Park, our award-winning bottling plant, able to process 1,200 bottles per minute or over 1 million per day. The Park is carbon neutral, powered in part by its own source of renewable energy; 500 employees and a further 2,400 indirect jobs across the supply chain.
Accolade Wines’ Response to the Call for Evidence
Accolade Wines is a member of the Wine and Spirit Trade Association [WSTA], which represents over 300 companies producing, importing, exporting, transporting and selling wine and spirits in the United Kingdom. Members range from major retailers, brand owners, importers and wholesalers to fine wine and spirit specialists, logistics and bottling companies.
Accolade Wines has consulted with the WSTA and provided feedback on the association’s submission to the Committee. The submission is reflective of the company’s position and we are pleased to offer it our full support. I encourage the Committee to give the association’s response consideration.
There are a number of issues, however, worthy of re-emphasising in this correspondence for their importance to the UK-AU FTA, Accolade Wines and the wine sector more broadly, including:
The potential to negate the tariff benefits secured in the UK-AU FTA if the proposals for the treatment of wine in the ongoing UK Alcohol Duty Review are not reconsidered;
That non-tariff barriers, such as the inability to significantly ‘transform’ an imported wine product in- market in Great Britain remain and that this is to the detriment of attracting increased Foreign Direct Investment from the wine industry.
UK Alcohol Duty Review
While Accolade Wines welcomes HM Government’s commitment to modernise alcohol duty through a simpler taxation system and we were also pleased to see the abolition of a separate rate for sparkling wine, there are a number of issues that the wine industry has identified with the proposed reforms. Among these, Accolade Wines is concerned about the unintended consequences for the wine sector of the proposed reforms, which, if implemented in February 2023, will introduce challenges for consumers and the wine trade alike.
On all Australian wine exported to the UK annually, the proposed reforms, if they are ultimately implemented, would increase duty by at least £81 million per year. This increase, which would be disproportionately borne by wine-producing nations such as Australia with their naturally higher alcohol by volume [ABV] levels, would entirely negate the tariff-free benefit of the FTA, and has a very real likelihood of dampening trade in wine between Australia and the UK.
In addition, Accolade Wines supports the government’s intention to introduce a single flat rate based on the pure alcohol content of the product. The proposed benchmark for the new duty on wine of 11.5% ABV, however, will see most wines attract a higher excise duty rate. In turn, it is likely that consumers will opt for alternative alcoholic beverages that fare more favourably under the proposals, undermining two-way trade as part of this bilateral agreement.
While I recognise the Committee is focussed on the FTA, it is appropriate that consideration be given the domestic duty framework that may unintentionally discourage investment in Britain.
Winemaking practices
In addition to the FTA and as you know from the Committee’s work in this area, the UK and Australia continue to have a separate bilateral wine agreement which is likely to be updated over time via a Joint Management Committee [JMC] process. At multiple points in the FTA consultations, Accolade Wines and other producers raised the importance of securing liberalising winemaking practices as part of the FTA.
At present, winemaking practices, such as blending, sweetening, carbonation/aeration, are not permitted to be undertaken in the UK on imported wine products under retained EU Regulation 1308/2008. These winemaking practices are commonly undertaken in Australia and at source in multiple other wine-producing countries as part of the ordinary winemaking process.
These components comprise an important part of a favourable business operating environment which can attract investment from Australia and other countries. In the short term, these considerations should be addressed in the ongoing review of the wine regulations to encourage reformulation, investment, and innovation.
Thank you for considering this correspondence and for your ongoing support for the wine sector to provide British consumers with greater choice of quality Australian wines in the years ahead. I would be delighted to provide additional information to the Committee or appear before an upcoming hearing. I would also welcome the opportunity to meet with you again to discuss the matters raised in this letter. Ms Brigitte Xelot, Government Relations Advisor, can assist in organising a meeting with your office and to provide any information on behalf of the company.
Yours sincerely,
Managing Director.
