Written evidence submitted by Wines of Great Britain Limited
1. Executive Summary
This paper is submitted by Wines of Great Britain Limited, the trade association for the wine producers of the United Kingdom. It is supported by UK Vine Care Limited, Vine Works Limited and McNeill Vineyard Management Limited, three of the largest vineyard management companies in the UK.
Wine GB would wishes to see a flexible immigration regime so that the UK industry is able to access seasonal and casual workers from outside the UK and preferably the possibility of longer term immigration by skilled workers (given the shortage of skills in the UK and that the UK wine production industry is rapidly expanding).
Wine GB has no objection to this paper being published.
2. Background
2.1 Wines of Great Britain Limited (“Wine GB”) is a trade association for producers of wine in the United Kingdom; it is the entity resulting from the merger in 2017 of English Wine Producers Limited and United Kingdom Vineyards Association. As at 31 December 2017, it had approximately 500 members encompassing vineyards, wine producers, and consultants serving the industry, predominantly in England and Wales. Wine GB does not, generally speaking, represent retailers such as supermarkets or the hotel and restaurant trade.
2.2 The English and Welsh wine industry currently produces approximately 5m bottles of wine per year, depending crucially on harvest conditions, of which normally about two thirds are sparkling wine. The industry is currently experiencing rapid growth in terms of planted vines and wine sold and there has been substantial investment of capital and in professional management in the industry in recent years. Production of grapes and wine is also increasingly seen as a valuable diversification, particularly for fruit and vegetable growers and arable farmers. The Committee should be aware that statistics on the industry are of limited reliability and one of the tasks of Wine GB is to improve them as soon as possible. What follows therefore is, of necessity, Wine GB’s best estimates.
Our members also produce a small quantity of wine based spirits such as brandy and eau-de-vie but these are not currently particularly significant volumes.
2.3 English and Welsh wine is now exported to some 27 countries around the word; the principal markets are currently believed to be the United States of America, Japan, and Australia, with the Nordic countries being important smaller markets. Other markets include China and Hong Kong, Canada, the Netherlands, Switzerland, Belgium, Italy, Germany, France and India. It is not clear how many producers are involved in the export trade (probably around 20-30) but it tends to be the larger producers; many of the latter see exports as a key part of their strategy. The key selling point for all producers is that the quality of the wine (particularly sparkling wine) is competitive with similar wine from other areas of the world.
2.4 Although it is essentially an agricultural industry, the growing of grapes and wine production is a more labour intensive industry than the production of cereals and livestock – overall perhaps 2-3 people per 25 acres compared to perhaps 1 or 2 people per 2-3,000 acres for cereal production. There is also a need for seasonal manual labour which varies during the year (see below). However, the value of the crop is also higher so that the conversion of cereal land to vineyard should enhance overall productivity. (One acre of land should produce about 3 tonnes of grapes, which in turn produces about 2,500 bottles of wine with a value at RRP of around £50-75,000 if sparkling wine (and about half of that if still wine). Excise duty and VAT paid on a bottle of sparkling wine sold for £30 per bottle amounts to approximately £7.75, so the produce is also attractive for HMRC. By contrast, an acre of land will produce around 3.5-4 tonnes of wheat with a value of around £400-500 and, as a food product, no such revenue for HMRC.
2.5 Wine GB intends to produce, in the near future, a statement of its vision for the future of the industry. It is too early to be clear where the industry will be with any degree of confidence at present, but the perceived levels of vine planting suggests rapid growth for a number of years to come: it is not too fanciful to say that over the next 20-30 years production is likely to grow very substantially, much of which will be exported. This should provide rural development, particularly in Southern England, but also in the wider UK; due to the higher level of labour intensity required, it will also provide a significant number of rural jobs.
2.6 The predecessors to Wine GB (English Wine Producers and UKVA) produced a paper (the “Brexit paper”) on their joint position on Brexit which was submitted to the Secretary of State in December 2016; a copy of that paper can be accessed here:
A copy of the reply from the Secretary of State can be accessed here:
http://www.englishwineproducers.co.uk/files/7515/1611/7226/Response_from_Sec_of_State.pdf
3 Labour usage in the industry.
Labour in this industry divides into permanent staff and casual/seasonal staff. Permanent staff divide, broadly, into four categories: vineyard management; winery production; sales staff and finally general administrative staff. The latter two categories are already sourced largely from the UK and we do not expect any problems in recruiting in these areas. However, although winery staff who are UK nationals are becoming increasingly available as a result of the courses run at Plumpton College in Sussex (which is the pre-eminent provider of education and training in this area), it remains desirable on occasion to employ non-UK staff in order to ensure that the UK is up to date with global industry developments.
There is a bigger problem with vineyard management staff where the UK is simply not producing enough skilled vineyard managers to cope with demand, an issue which is likely to be exacerbated by the number of new vineyards being established and the growth in the area under vine. The industry, in the form of Wine GB, is actively engaged in discussions with Plumpton College and Government (at both national and local levels) to encourage a number of developments in education and training in the UK such as reworking apprenticeship schemes (the current conditions to apprenticeships are not geared to rural industries and the schemes are thus very difficult to access for the wine industry for most people). We are also encouraging the expansion of vineyard management training and the creation of “satellite” courses at more agricultural colleges around the country. In fairness we believe the Government is willing to listen to us on these topics, although a lot of work remains to be done.
Turning to casual/seasonal staff, the industry needs such staff at four particular points in the year:
1. Pruning in December to early March
2. Bud rubbing in April/May
3. Canopy management in June/July
4. Harvest in late September through to early November. This is generally the point at which the labour requirement is at its greatest and it is also the time when the fluctuation in demand for labour for individual harvests is at its greatest (since harvest may stretch over six weeks (e.g. in 2017) or be compressed to a couple of weeks (as in 2013)). Those fluctuations are driven by climatic conditions and the consequent impact on the ripening of the fruit.
The continuing availability of casual and seasonal staff is a matter of great concern to the industry. It is possible that some of this requirement can be mechanised but considerable demand will remain for the foreseeable future. It is not principally a matter of the price of labour (although it would be wrong to say this is not an issue): most of these tasks are semi-skilled and there is simply not any significant number of UK citizens who have the skills. Perhaps over time a pool of sufficiently skilled labour could be developed but it will not occur quickly as training is needed. In fairness one must also add that the shortage is not the same in every area: places where other soft fruits are grown find this less of an issue but labour mobility and the fact that the time when labour is required is the same throughout the UK means that such labour cannot really commute to other sites outside their home area.
Currently, casual and seasonal labour is sourced from a variety of places. Basically casual labour requirements in the winery at harvest are met by home grown recruits on temporary contracts and migrant labour from Australia, New Zealand and South Africa (partly because our harvest is a quiet time for their own wine industries). Casual and seasonal workers for the vineyard (which proportionately represent the largest number of employees by some margin) are very different: most of them will be sourced from Eastern Europe and will be skilled but are available because their own domestic industries harvest earlier in the year compared to the UK.
It is also worth noting that the impact of labour issues in the vineyard industry varies somewhat depending on the size of vineyards. Although it is impossible to give a firm rule, generally speaking smaller vineyards (under 2 or 3 acres) are often able to supply their own needs either from the owners’ own exertions or through local and family resources. However there is now a significant number of wine production operations which take grapes from 50 or more acres (and several over 200 acres) and these normally have to rely on seasonally hired professional labour. There is a burgeoning service industry developing which supplies this labour (among other things) and UK Vinecare Limited, Vineworks Limited and McNeill Vineyard Management Limited are examples of these suppliers.
It should be noted that actual requirements will vary considerably from year to year, largely depending on the climatic conditions in the relevant year but in the UK also considerably affected now (and for the foreseeable future) by the rapid growth in the area under vine. The committee may wish to note that in 2017, our estimate of the seasonal labour requirement during harvest was approximately 3-4,000 people but this is of necessity a rough estimate only, partly as no central statistics exist but also because labour is hired well in advance of harvest some of which may not be required if the harvest is reduced by climatic conditions. This number will increase substantially as the area under vine increases: as discussed above, we anticipate about 1.2 - 1.5 million vines will be planted in 2018 and perhaps the same again in 2019, which would represent an almost 35% increase in area under vine since December 2017 and almost a 67% increase on 2015. This will not lead to an immediate proportionate increase in labour requirements as vines only reach maturity after 5 years, but the demand is increasing anyway as numbers of vines planted in 2016 and 2017 were approximately 750 thousand and over 1.0 million respectively. For comparison, approximately 1839 hectares were under vine as at 31 December 2015 (source: Wine Standards Board). (A hectare of vines will contain approximately 3,500 - 5000 vines). However, it is also worth pointing out that almost all of these new plantings are in larger vineyards where reliance on local and family labour is not viable so that the demand for hired seasonal labour will be even greater than might be suggested by a simple comparison of the areas under vine. Accordingly we think that the demand for seasonal labour will at least double in the relatively near future (and even more if, as we expect, a significant level of planting continues for the years after 2019). This demand simply cannot be met by the domestic market alone.
There is now good evidence that large overseas wine producers are beginning to look at the UK with a view to significant investment – two very large and well respected champagne houses (Taittinger and Pommery) have already bought land and are investing in wine production here and we fully expect them to be followed by other producers, and not only from the EU. It is essential that they are reassured that the Government understands and accepts that suitably skilled labour must be available in the UK if such investment is to continue.
4 Turning to the questions posed:
A. Has the labour supply available to your business/sector improved or deteriorated in the past 12 months? What effect has this had on the economic performance of your business/sector?
4.1 As discussed above, the demands for labour in the wine production industry are highly dependent on climatic conditions and 2017 was not, generally speaking, a year in which yields were particularly high. A sharp frost in April caused great damage but good weather later led to recovery so that the yield was around 50% of the maximum. As a consequence, there was no general shortage of labour availability; in any case, our current membership of the European Union meant that access to East European labour is still unrestricted.
4.2 However, notwithstanding this, the labour supply situation has deteriorated somewhat; there are several reasons for this. First, the decline in sterling has meant that employment in the UK is less attractive. Second, improved employment opportunities and the introduction of minimum wages in some countries has also led to employment in the UK being less attractive. There is also some evidence that some potential staff are beginning to lack the confidence to take up employment in the UK as they perceive that the political climate (as reported in the media) is discouraging them from coming (or returning) to the UK as they find it difficult to understand why the traditions of politeness, tolerance and hospitable reception in the UK appear (to them at any rate) to be being eroded. One of the impacts is that younger staff seem less inclined to come (or return) so that the age profile of staff is increasing. For the grape and wine producers, this has not so far had any material impact overall on the economic performance of the industry, but the threat for the future remains and is potentially significant. An inability to harvest crops through an inability to find labour willing and able to undertake the job is, of course, potentially a far more serious issue than a simple increase in the price of labour. For the labour-only sub-contractors however, the threat is more serious: an inability to supply competent labour clearly strikes at the heart of their business and we are told that the decline in sterling and the increase in the UK national minimum wage is already threatening their margins significantly.
B What estimate have you made of the labour situation in your business/sector over the next 12 months and up to the UK’s planned date for leaving the EU?
4.3 The position of permanent staff is broadly in balance and we do not believe the sector will experience material difficulties with obtaining permanent staff during the next 12 months except possibly in the case of vineyard managers. It is too early in the year to make any sensible estimate of the overall requirement for casual/seasonal staff (as it will depend, as ever, on climatic conditions and the consequent yield) but if this year was a “full” harvest, we would anticipate that at harvest, about 3-4,000 employees from Eastern Europe will be required in total. This number will increase substantially as the plantings made in 2016 and 2017 (and plantings made thereafter) mature.
C. The Government in early 2017 told the then Committee that reports of foreign labour shortages were “anecdotal” and that there would not be a problem of foreign labour supply while the UK remained subject to free movement rules as a member of the European Union. Has this statement proven accurate, or have difficulties in recruiting foreign labour increased even though the UK remains a member of the EU?
Broadly speaking we agree with the Government: our only caveat is that a serious deterioration in the value of sterling may cause difficulties. That said, as mentioned above there are a variety of factors which are making the UK less attractive to migrant workers, especially those from the EU.
D. In early 2017, the Government’s long-term policy aim was to make the agricultural, horticultural and food sectors “less reliant on migrant labour and use more UK workers”. Has there been any sign of successful Government action towards that objective?
None so far as we are aware but in fairness this is a problem that will take some years to solve and we have some reason to believe that government will listen to our suggestions sympathetically, at least in relation to our proposals regarding education and training. We urge the Government to make clear as soon as possible that migrant labour will continue to be welcome here as long as these sectors require them: the Government’s longer term aim (to which the industry has no objection per se) should be achieved by adopting policies which makes employment in these sectors more attractive to UK nationals, not by simply making labour unavailable and thereby damaging the sectors themselves. Migrant labour is also generally positive for the UK: money earned is partly spent locally, they pay significant levels of tax (through PAYE) while not making significant demands on the NHS, school places or rural housing.
As mentioned above, this evidence is supported by, and includes information supplied by, the following:
Vinecare Limited
Vineworks Limited
McNeill Vineyard Management Limited