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UK cognac stocks rise to avoid border delays
Cognac exporters are stockpiling supplies in the UK to bypass border disruption as chances of a no-deal mount.
Patrice Pinet, of the Bureau National Interprofessionnel du Cognac and president of the Syndicat des Maisons de Cognac, said: “Spirit merchants have been bringing forward their exports to the UK to ensure stocks in the period of uncertainty which could appear in the event of no agreement.”
The two organisations are co-ordinating with the French government to try to help things go smoothly.
Last year, the UK was the fourth biggest export market for cognac, with 9.7 million bottles, behind China, Singapore and the US.
Marie Auden, director of trade and economic affairs at the spiritsEurope trade body, said: “At the moment in the EU, exported spirits are only taxed in the country they are sold into, and can pass freely across borders under a common customs system until they reach those countries.
“If there is no deal, that will end, and to send whisky from Scotland to Italy via France will mean completing paperwork for each country the lorry passes through. In the EU it is done electronically but that will not be possible straightaway, and exporters and importers might have to use paper forms, as countries outside the EU do.”
She said there are no extra customs duties on spirits, except for rum, under World Trade Organisation rules.
“Large companies export to countries outside the EU all the time and might be able to put their procedures for the UK in place quickly on March 30, but that does not mean it will be smooth,” she said. “Border delays have costs, even if spirits can cope better than fine wines.”
Contingency plans have been drawn up at Pernod-Ricard, which exports Martel cognac, Mumm and Perrier Jouët champagne, and imports Chivas, Ballantine’s and Glenlivet from Scotland.
So far, extra stocks have been built up in the UK only for Absolut vodka from Sweden and Campo Viejo wines from Spain, but other products such as cognac are being planned for.
French wine, under World Trade Organisation rules, is expected to be taxed by the UK at a rate of €13.50 to €15.50 per 100 litres, which will add an average of 10p per bottle, the company said.
A spokeswoman said: “We have begun implementing contingency plans and are confident we are well prepared for all scenarios.”
Small cognac producers have traditionally left the paperwork for exporting to the UK to agents and distributors, and most expect they will continue to do so.
Jacques Petit, of André Petit & Fils in Berneuil, Charente, said: “But the UK is a small market now for most small producers.
“The market for fine spirits collapsed in the financial crisis there, and has not recovered, especially as the taxes on alcohol have become higher in the UK.
“It is a complicated market for anyone except the big houses.”
China has replaced the UK, Belgium and Germany as his main export market. “There, the customs formalities are all done by the importer and it is smooth, no problems at all.”
Last year, France was the second biggest export market for Scotch whisky, after the US, with sales of £442.1million.
Karen Betts, chief executive of the Scotch Whisky Association, said the association was keen for frictionless trade between the EU and UK.
She said: "It is important to our industry that the UK does not leave the EU without a deal at the end of March.
“We are urging the government and parliamentarians to work together constructively and pragmatically to ensure that an agreement is reached quickly."