Food & Beverage

Despite protectionism fears, people will want to continue trading wine worldwide: CEO

Should winemakers be concerned about trade?

Following the shock outcomes from events like Brexit and the U.S. election, concerns over a rise in protectionist measures is putting businesses around the globe on edge.

However, while this risk factor is set to cause a stir in 2017, winemakers and merchants believe trade in this industry will continue, despite the anti-globalization rhetoric emerging.

"In simple terms, I think people are still going to carry on drinking," Dan Jago, CEO of Berry Bros. & Rudd, told CNBC.

Around 99 percent of all the wine that Britons consume is imported, Jago said, when commenting on the U.K. market, adding the remaining one percent is English sparkling wine, which is growing quickly as well as its exports.

"There are challenges around things like taxation, which is quite a hard challenge for this market," he added.

"(However), for us it's a really interesting time. We need to see. People will continue to want to trade wine around the world."

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During Donald Trump's presidential campaign, the Republican said he had a seven-point plan to rebuild the U.S. economy – a plan that would improve the job market, while reducing the trade deficit. Under his potential policies, Trump has indicated a preference for the U.S. to withdraw from the Trans-Pacific Partnership, while renegotiating its agreement with NAFTA.

Meanwhile, the future of the U.K.'s relationship with the European Union and its single market is up in the air, with EU leaders saying the U.K. cannot cherry pick parts of the single market it wants to keep.

The World Trade Organization has spoken out against protectionism during 2016, saying in July that a rise in trade restrictions would be "the last thing the global economy needs" as it could have a "further chilling effect on trade flows" as well as ramifications for job creation and economies.

Neil McGuigan, CEO and chief winemaker of Australian-based McGuigan Wines, echoed similar comments to Jago, remaining positive on the future of wine and trade-relations. In an interview with CNBC, McGuigan said Australia had a "great relationship with many countries around the world".

Other headwinds in the mix?

While protectionism rhetoric is set to continue, winemakers will have a number of other potential headwinds including weather and volatility in the currency markets, such as the stronger dollar and weaker pound.

Exchange rates are our biggest challenge: McGuigan

"I suppose, it is exchange rate that would be our biggest challenge, (as well as) free trade agreements that we need to work with," said McGuigan, adding that the availability of water was at times a concern for Australian winemakers. However at present McGuigan said the country was "sort of drought-proof for the next two or three years."

As a wine and spirits merchant, Berry Bros. & Rudd tries to find the best opportunities around the world when it comes to wine and ideal weather.

While the trader has found some great vintages in Bordeaux and in Burgundy as of late, icy weather conditions such as hail and frost has really had an impact on Burgundy. However, global warming had been beneficial for the likes of English sparkling wine producers, Jago added.

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