‘We just had to take the hit on our already very slim margins’

Brexit Proof: Thomas Soliman, GreatVine Limited

Thomas Soliman, co-founder and director of Belfast-based GreatVine

Thomas Soliman, co-founder and director of Belfast-based GreatVine

 

Thomas Soliman is co-founder and director of Belfast-based GreatVine Ltd which employs four people.

What was your reaction when you heard that the UK had voted to leave the EU?

We were really shocked, saddened and seriously concerned about our small business and future livelihood.

How is your business likely to be affected?

Our business was affected straight after the referendum result by the immediate negative impact on the pound against the euro. We purchase wines in euro, so suddenly we were paying a lot more for our stock.

We had already increased our wholesale prices earlier in the year, due to yet another increase in UK excise duties on wines and with pressure from much larger competitors in the market, it meant we really couldn’t risk increasing prices to our customers again.

We just had to take the hit on our already very slim margins.

When did you begin preparing for Brexit and what contingency plans have you put in place?

The only official advice we have received came through the bonded warehouse we use in Northern Ireland. They told us that we would need to apply to the tax office to access a system that apparently allows most traders importing from the EU, up to six months to pay import duties and submit customs declarations, if the UK is unable to agree a free trade agreement on wines by the end of the transition period.

We got a €2,000 Brexit voucher from Intertrade Ireland, which paid for a consultant to spend a few days to help with our Brexit preparations. As a result of that, we decided to establish a new limited company in the Republic, which we will need to be able to open a wet bond account, so that we can keep wines under bond for customers south of the Border.

We also intend to focus on greatly expanding sales into Ireland of our unique premium finish branded bottles at unheard of low minimum order volumes of just a single pallet.

What has concerned you most about the process so far?

The lack of information and lack of certainty which is still ongoing is our biggest concern. Nobody knows for sure how things are going to end up. A big worry is loss of access to the electronic system of monitoring goods, called EMCS. A paper-based regime would be a €300 bill for extra lab tests for every consignment of wine sent to the UK, no matter how big or small. Those costs would naturally be passed onto us.

And what has given you hope?

The government has thankfully done a U-turn after reneging on an agreement with the Wine & Spirits Trade Association that no new documentation would be required, although we’re still not 100 per cent sure how things will end up or if they can even be taken at their word.

Are you examining new markets/suppliers? And if so, how practical is that?

Yes we are developing an exciting new direct to consumer and B2B e-commerce project to champion artisan wineries that practise sustainable vineyard management. Our stock for wineswithstories.com will be located in Spain with a 360-degree wine e-commerce logistics specialist, which will handle all shipping and returns. This means that our turnover will rely much less on the business we do in the UK.

When do you expect to be Brexit-ready?

I’m really not sure that we can be 100 per cent Brexit ready, without knowing what the final trade agreement will be for our industry. Even then, if it’s a free trade agreement, how will it be managed without using the existing electronic system to keep track of imports and exports?

What’s your best/worst case scenario?

The best scenario is that we get a free trade agreement and, importantly, that we are still able to use the existing electronic system to track shipments so we’d have no additional costs or administrative burden.

From our no-deal planning at GreatVine, we know what a bad outcome could look like in a worst-case scenario. Amongst other things, it would mean: tariffs on imports from the EU; additional paper forms to fill in; the requirement to get certificates of analysis on every wine we import; the need to strip label every bottle with “Imported by GreatVine Ltd”. Can you imagine?

Does Brexit present any opportunities for you in your business?

Hopefully now the government will be forced to find a way to free up trade through innovation and improved technology, so that any new regulations will be managed digitally.

Potentially also in new global trade deals, current tariffs on wines from Australia and New Zealand for example could be eliminated as part of free trade deals with the UK.

Are you stockpiling goods/raw materials?

No, we are too small to take the cashflow hit involved in stockpiling.

Now that we are in the transition phase, how might the government help ease the pain of Brexit for your company’s sector?

They could ensure that there is no increase in excise duty this year.

How confident are you in the government’s ability to handle negotiations on a trade deal?

To be brutally honest, from what we’ve seen so far we remain extremely concerned. All we can do in the meantime is to try to mitigate the risk of a worst-case scenario by actively developing our business in markets outside the UK.

Looking out five years, how do you think that your business or industry will have changed as a result of Brexit?

We would hope that over time, common sense will prevail and new digital solutions to any friction that may be created by Brexit will have been developed by then. Hopefully all tariffs on wines will have been eliminated for all countries as well.