Like many industries currently, concerns over the Brexit trade deal means wine businesses up and down the country are also falling foul of ongoing negotiations.
Whilst each wine business remains unique, there's been a growing trend to stockpiled cases of wine in a bid to manage and reduce any future currency risk. Sadly, much of the UK's wine trade has already felt the margin pressure of a weak pound sterling, which has so far failed to recover to levels seen prior to the Brexit referendum in June 2016.
According to WSTA figures, around 55% of wine consumed in the UK is imported from the EU. At a press conference on the day of the Hospices de Beaune sale earlier this month, the president of the Union des Maisons de Vins de Grande Bourgogne, Frédéric Drouhin advised producers to 'overstock' shipments to the UK, to avoid being short of wine, should customs clearance get too complicated.
So, whilst stockpiling wine may help to overcome potential customs uncertainty there are also a number of actions your business could take to manage ongoing currency risks.
A forward is a contract to purchase an amount of foreign currency at an agreed rate, either in parts throughout or in full at the end of the lifetime of the agreement. As there are no guarantees in how the market will move, forward planning allows you to reduce the risk and lock-in an agreed rate. The downside to this approach is if the exchange rate moves to a better rate than the fixed exchange rate you've already agreed.
Audit historical transactions
The foreign exchange industry is unregulated and understanding the true cost of overseas payments can be difficult. Currency providers often boast '0% transfer fees', and whilst it may appear there is no charge, the provider's profit will be hidden within their rate. WhitesPay has its own Currency Review software in which we reveal how much your previous transactions cost. We recommend all our clients conduct a currency review on historical transactions, so you can gauge the differences in cost when using WhitesPay as your overseas currency provider.
If you're currently using the bank or a broker to manage your cross-border payments, it's important to discuss any future sales you may have planned. By doing so, your provider will be able to help better mitigate any possible currency rate movement as well as offer insights into factors, which may ultimately move the rate. You can reveal historic transactions here.
Monitor the markets
Our morning market email provides industry, currency and economic news, which allows you to better understand currency rates. You can sign up here.
Fluctuations in the market can profoundly affect any business and WhitesPay understands the need to manage these. Simply follow the above steps or contact us direct, if you'd like to discuss how to develop a currency strategy that works for your business.