Wine Reforms Consultation

Overview

Foreword

Leaving the European Union has given us the opportunity to review how we make and shape the regulatory framework for food and drink.

The government has delivered the first two phases of the assimilated EU law (AEUL) wine reforms. The first Statutory Instrument (SI), ‘The Wine (Revocation and Consequential Provision) Regulations 2023 (No 1362)’, introduced simplified labelling rules for the wine trade which came into effect on 1 January 2024.  In addition, packaging requirements for sparkling wine were liberalised to reduce costs and support recycling and the removal of restrictions on hybrid grape varieties will give industry the freedom to innovate. The second SI, ‘The Wine (Amendment) (England) Regulations 2024 (No 115)’, will update the list of approved oenological practices and introduce a definition for ice wine in July 2024.  

Following on from the successful delivery of these reforms, the government intends to continue improving the regulatory landscape to boost industry, encourage investment and support innovation to meet existing and emerging consumer demands and trends.

These amendments work towards creating a regulatory environment suitable to promote innovation and reduce industry burdens. These changes also improve sustainable practices and increase consumer choice without compromising on standards.

This consultation forms part of the government’s smarter regulation programme of regulatory reform measures that began in May 2023 with the publication of Smarter regulation to grow the economy. Smarter regulation is about improving regulation and guidance for businesses across the board, ensuring it is clear, proportionate and does not unnecessarily impose burdens on businesses which restrict innovation and growth.

Policy Objectives:

1. Frictionless trade. Increasing the sector’s export capability by removing regulatory barriers to trade.
2. Consumer confidence. Ensuring labelling and marketing rules continue to give consumers confidence that the products they are buying are safe, authentic, and meet their quality expectations.
3. Sustainable growth. Ensuring our regulatory framework promotes long-term investment and growth in the sector.
4. Environmental impact. Introducing regulatory changes that promote sustainable industry practices and are in line with the government’s net zero ambitions.
5. Removing burdens. Reducing red tape and costs for businesses.

Background

The UK is a global hub for wine. It is home to a diverse and dynamic wine sector and is the second largest importer of wine in the world by value. In 2022, off-trade sales of still, sparkling, and fortified wine via supermarkets, convenience stores, and specialist off-licences in the UK were worth around £7.6 billion, while on-trade sales through hospitality outlets were worth an estimated £3.5 billion.

Following the UK’s departure from the European Union, the UK incorporated the existing framework of EU wine law into domestic law. This consultation covers England only. Should these changes be introduced, wine produced in accordance with these new regulatory requirements will be able to be sold by retailers in Northern Ireland when moved under the Northern Ireland Retail Movement Scheme. The Internal Market Act 2020 will allow for products produced in England and Wales to be sold in Wales and Scotland. 

The AEUL inherited from the European Union on wine is complex and contains unnecessary restrictions on how wine can be produced and marketed. Defra and the wine industry have identified various instances where AEUL impedes growth and competitiveness in the wine sector, and limits opportunities for business to innovate or promote sustainability within the global wine sector.

The government previously consulted on reforms to wine AEUL to gather views on policy proposals. These provided enough information for the reforms we have already introduced, but only provided an outline for the more complex reforms in this consultation, where more time was needed to work up detail with our wine producers and wine trade. This consultation will gather views on the specific elements that we alluded to in the earlier consultation and allow consultees to view the draft statutory instrument that will amend AEUL.

Economic Overview

For this section we focus on reforms that we think will have the biggest economic impacts for England.   

Transformation of wine (including carbonation). This is an area of the proposed reforms that we expect to unlock economic potential. Introducing the ability to transform wine in-market could create business opportunities for the bottling and re-exporting industry. That could take the form of increased foreign direct investment (especially for in-market carbonation) and potential spill-over benefits on the manufacturing sector (increasing demand, employment, R&D and innovation).

We anticipate that importing wine in bulk as compared to shipping packaged (bottled) wine will have significant environmental benefits. Bulk wine containers enable more than double the volume of wine to be shipped per container compared to the finished bottle, which means that businesses can transport two and a half times more wine for the same transportation costs. As well as reducing emissions, shipping consolidation will help to reduce pressure on the supply chain.

If businesses chose to implement these reforms, they can anticipate incurring additional costs including, upfront investment costs for new plants, operational and staff costs. Businesses will also incur familiarisation costs.  Our domestic wine production industry, which is growing quickly, has developed a solid reputation for high quality/high-priced wines, especially quality sparkling wine. While transformed sparkling is expected to compete with other sparkling wines already saturating the UK low/mid-priced market, we recognise that the bandwidth of the sector is fluid and could pose a theoretical risk to domestic industry. Mitigations such as adjusting labelling provisions applicable to wine that is carbonated here have been included to make sure that consumers can clearly see what they are buying.  

No and low alcohol wine. Another area of potential growth is the proposed reforms to the definition of wine to allow for the production of no and low alcohol “wine”. The no and low “wine” share of the total wine category stood at 0.9% in 2022. We believe the main costs of the reforms related to no and low “wine” to be, upfront investment costs for new plants, operational and staff costs (if businesses decide to produce no/low wine), familiarisation, and opportunity costs as consumers shift away from traditional wine. Benefits include increased innovation, giving producers and consumers more choice and wider health benefits.

We will consider relevant World Trade Organization (WTO) and free trade agreement (FTA) obligations in proposing these changes. Defra has incorporated stakeholder views into its policy development process so far and has identified areas to take forward in legislation.

How to respond