Food and Drink (Miscellaneous Amendments Relating to Food and Wine Composition, Information and Labelling) Regulations 2021

Lord German Excerpts

Wednesday 19th May 2021 Grand Committee

[Lord German (LD)]

My Lords, this legislation reads like a stopgap—a set of rules that will apply for a fixed period of time while more detailed solutions are sought. For that reason I want to concentrate on the route map that it sets out and, in particular, the impact it will have on the wine industry. I appreciate that rolling over the EU legislation has posited issues in this area: first, that rules on products placed in the EU market now apply to the UK as a third country since we left the EU; and, secondly, that the withdrawal Act itself does not grant the power to amend the EU rules at this stage.

The wine industry is very important to the UK economy. It provides around 130,000 jobs, generates £11 billion in sales annually and returns £4.4 billion in duty paid to the Exchequer. Our wine exports are the sixth most important food and drink products exported—ahead of beef, pork and beer—and those exports go mainly to the EU. While we have a burgeoning English and Welsh wine industry, we export only about 5,500 bottles a year of home-produced wine. The vast bulk of our wine exports are as a result of our importing bulk wines from the USA, Australia and Chile, bottling them in the UK and then exporting those bottles primarily to the EU. There is an obvious question I must ask the Minister in relation to the proposed Australia trade deal: with 24% of our non-EU wine imports coming in bulk from Australia—much for re-export into the EU—is the current wine trade deal we have with Australia under reconsideration? This is a sector that could damage our own export business if additional trade barriers were to be put in place in any new trade deal.

I understand that there are also issues relating to labelling for the re-exporting trade to the EU. The EU Commission has expressed concern that including details of a non-EU importer, bottler or producer address in addition to an EU importer, bottler or producer on the label of a wine placed in the EU market could be misleading and incompatible with EU law. I would be grateful if, in replying, the Minister could explain how the Government intend to resolve this difference of view between the UK and EU and what the major barriers are to a resolution. The UK drinks 10 million to 12 million bottles of wine a day, and we are the second largest importer in the world by volume, after Germany, and by value, after the USA. Given the importance of the industry and the fact that we are rolling over the EU regulations in this area—now as a third country—there are important issues about adding cost to the business activity.

At the end of the grace period, businesses will no longer be able to use one label for both the UK and EU markets. This affects the 56% of our wine that we import from the EU, which is about 6 million to 7 million bottles a day. That means 6 million to 7 million extra labels to be put on bottles every day, labels which will generally be placed on bottles by the EU exporter rather than the importer. EU wine exporters bottle their wine and then lay them on skins—that is, label-free. Labels are affixed after the purchase order has been received. The cost of producing and affixing each extra label runs to about 12p on average. Wines that are sold in limited quantities will require hand labelling, which is a much more expensive operation. That cost will be passed on to the importer and, ultimately, the consumer in this country. So, at a stroke, that is over £700,000 a day of extra cost passed on to GB wine businesses. While these regulations provide a grace period on EU imports, can the Minister explain whether the Government intend to review the dual labelling requirement before September 2022, so as to remove cost from the businesses working in this area?

Finally, I would like to examine the difference in these regulations between the requirements for wine and those of other food and drink importers. Under the EU regulations, all food and drink imports except for wine require the address of the operator responsible for the food information, under whose name or business name the food is marketed. The food business operator can be any business within the supply chain as long as they are an established business which will take legal responsibility for placing the goods on the market. This is a much more flexible approach than the requirement for wine. Making the rules for wine the same as other food and drink products would simplify the rules for producers, importers and enforcement bodies. Can the Minister state whether this is the Government’s intention? I recognise that I have asked some very technical questions, so I would be happy to receive a written reply if the Minister cannot reply to me in detail today.