Will we still be saying “Cheers” after Brexit?

This is the second of a series of articles from the Liverpool Business School, Liverpool John Moores University, focussing on contemporary issues for local businesses.

Posted by Liverpool John Moores University

Mon 14th, Jan

The fears and concerns of Brexit have extended well beyond the United Kingdom’s borders, ringing alarm bells across governments and industry representatives. Europe’s wine industry, particularly French, Italian and Spanish wineries, have traditionally looked to the United Kingdom (UK) as an avid consumer. As the uncertainty continues however, they expect a significant impact on sales, raising the question as to where our wine come from post Brexit.

Three separate research studies conducted in 2017 among Italian and Spanish wineries provide preliminary clues around ways in which the industry perceives the impact of Brexit. The studies used data collected from over 450 different stakeholders in the wine industry drawn from Spain and Italy, identifying some interesting patterns.

Between 50% to 65% of participants expressed concerns relating to legal, economic and political issues and their future ability to trade with the UK, with 10% of participants already experiencing changing behaviours among importers, including discontinuing or significantly reducing imports. 15% had noted a drop in purchases due to currency fluctuations which had had a significant impact on prices.   

In response, winery operators are starting to look elsewhere and more specifically into the global marketplace. Despite the ever-crowded and competitive global wine market, there was a clear shift towards committing time and resources to either enter or increase activity in other growth markets. Interestingly this was also driving up quality as producers make investments in areas including vineyard management and equipment, grape selection and their promotion and marketing. In addition, there was also an increasing focus on small, high-end consumer markets. Amidst the uncertainty therefore, the focus seems to be on improving their products and investing in both tangible and intangible assets.

For around 20% of winery operators, the potential of one door closing creates opportunities that demand flexibility, creativity, resilience, and innovation. The importance of diversification, broadening operations and addressing logistical considerations emerged as the most sensible business philosophy to adopt in order to address the challenges of Brexit as well as other market trends. This includes more investment in foreign language skills and updating their marketing techniques to include online communications, to enable them to raise their profile to a wider group of potential consumers.

Interestingly 35% of the participants felt relatively secure either because they already had an established reputation, an agile distribution and supply chain network, or had concentrated on niche markets that were prepared to pay for high-end, high-quality products which appear to be least vulnerable to Brexit.

Uncertainties around Brexit rumble on but it is clear in this sector that one way to address this is through investing and diversifying operations to become more flexible and adaptable to change as well as focusing on quality. What does this mean for wine drinkers? Hopefully, more choices of top quality wine to pick from!

 

This is the second of a series of articles from the Liverpool Business School, Liverpool John Moores University, focussing on contemporary issues for local businesses. This comparative study provided practical insights to winery owners and managers, informing them of impacts to be expected from Brexit, as well as ways in which adaptiveness and resilience could be built to address this phenomenon.

The research team, Dr Abel D. Alonso, Dr Seng Kok, and Dr Seamus O’Brien, have completed a range of projects nationally and internationally (Western Europe, Oceania, Latin America) since 2006. Their research predominantly focuses on family, micro and small businesses in the areas of international business, innovation, socioeconomic development, and sustainability. For more information contact: a.alonso@ljmu.ac.uk

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