We polled hundreds of retailers, suppliers and key influencers to gauge the trade’s current confidence levels and found the overall picture is quite upbeat.
Respondents expect an initial period of turbulence – 45% said their business has done better so far in 2016 than the same period last year, while 24% said worse – but by the end of 2016 just 36% expect sales to have been better than 2015 compared to 30% that said worse.
But when asked how they anticipate their businesses will perform over the next few year, 51% said better, 25% said worse and 24% said the same.
Suppliers were slightly more positive than retailers, but overall the prevailing tone is cautiously optimistic.
Roy Gillingham of the Fareham Wine Cellar said: “I expect our business to do much better in the next few years after we have got rid of the effects of being in the unelected nut house called the EU.
“We could drop the tax on English wine if we wanted to and we would no longer have to pay an additional tax on wines outside the EU.”
Alex Carr of the Market Place Wine Shop in Suffolk added: “There is a lot of positivity. I have been around long enough to know that the pound will bounce back. It’s already all washing away now.
“I cannot see French and German wine producers raising their prices because they are struggling already. If they do then I shan’t buy any of it because there is a glut of New World wines to choose from.”
Counting the cost of Brexit
The OLN News Team polled drinks industry insiders to weight up the mood of the trade as the referendum result starts to make itself felt:
The drinks trade is still disappointed and fearful after the Brexit decision made by the electorate in late June, with almost hald of retailers and suppliers saying it has already impacted on sales and margins.
A poor exchange rate has forced them to raise prices on imported drinks, shoppers are cautious about spending money given the economic uncertainty gripping the country and businesses are worried that the Brexit process could drag on.
Now that several weeks have passed, a new prime minister is in place and plans are afoot to begin the process of extricating the UK from Europe, 28% said they are more positive than they were in the aftermath of the result. But 23% say they are less positive – the rest said the same – and much of that has to do with the uncertainty affecting everyone, rising prices and falling demand.
Retailers say they are still awaiting price increases from suppliers following the fluctuations in sterling and feel that the worst effects are yet to come. But, despite all that, more than half of those polled said they expect their sales over the next few years to be better than the previous few.
Kay Patel, owner of four Bestway stores in London, said: “I voted out. There has been no impact on the business but obviously there has been on the ecomony as a whole. They have been saying if we leave Europe commodity prices will go up. But I think suppliers are scared and are not upping prices.
“I see a brighter future for us with less red tape. Being in control of our own destiny. I see products getting cheaper in the long term if we have trade deals with other countries such as those in Asia.”
Carl Middleton, off-trade director at Marston’s, said business has been better in 2016 than last year and expects that to remain the same over the next few years. “The big consumer trends shouldn’t change and the move towards high quality UK craft beer, while already established, has a long way to run,” he said.
Chris Hill of Latitude Wine in Leeds said: “Business dropped for three weeks [following the referendum result] but seems to have bounced back in the past two weeks.”
But Ravi Kotecha, managing director of drinksupermarket.com, said: “We are still uncertain and are anticipating an impact either on revenue or the cost of importing goods.
“We have been trading well but it is the long-term impact. We don’t know whether the government will make changes to taxes and employment laws. Our business employs a lot of people from the EU. We are less positive since the announcement. It was not a positive move by the nation.”
Wines of Interest in Ipswich said sales have been worse than last year and expects the decline to continue over the next few years as people seem to be cautious about spending. But it warned that so much depends on what happens to excise duty.
Ted Sandbach, owner of the Oxford Wine Co, said: “It is difficult to know the impact of Brexit as we have had a good summer. We are up in June and July so we are ticking over quite nicely. But I think no one will be able to tell the impact for six to nine months. The exchange rate will have a big impact and that will be more important than anything else. Our sales are way up on 2015 as we were up 25% in June, but you never know what is round the corner.”
* So far in 2016, how has your business performed compared to the same period in 2015?
Better - 45%
The same - 31%
Worse - 24%
* How do you anticipate your business will perform in 2016?
Better - 36%
The same - 34%
Worse - 30%
* How do you anticipate your business will perform over the next few years?
Better - 51%
The same - 24%
Worse - 25%
* Have you noticed direct effects on yoru business since the Brexit announcement?
Yes - 55%
No - 45%