When taxes, packaging and the retailers’ share have been stripped out, Graham Sherwood finds the value of wine left for the poor old drinker is sobering’
Barely a week goes by without my wife exclaiming after a trip to the supermarket: “Look how much packaging there is in this box.” It’s usually followed up with: “This could be half the price if it was just in a bag and not a box.” Ironically, even though she is as much a wine lover as I am, she never airs the same disparaging views while uncorking a bottle of wine. And she would never extol the virtues of a box over a bottle where wine is concerned either.
It seems the cost of producing a bottle of wine is largely consumer-proof; basically we don’t care. So here’s a sobering thought. The taxable cost to every adult in the UK for alcohol consumption last year was £316 per head, double that of any of our European neighbours. The total figure of £16.3bn is drawn from both the VAT and duty levied on beers, wines and spirits by our government. However, when you look at the cost of producing a bottle of wine and – more to the point – the actual value of the wine in the bottle itself, your hackles do tend to start rising.
Below are a couple of examples, break-ing down who takes what out of, first, a £5 bottle of wine, followed by a £10 bottle. While these figures are rounded for simplification, they are quite accurate. Contained in the column headings – taking ‘value of wine’ as an example – are items such as the cost of the glass bottle, corks, labels and packaging. After all these are stripped out, the poor old winemaker doesn’t make a massive margin, does he? Inevitably, the retailer always does best, even taking into consideration the cost of advertising and promotion.
Government duty rates also vary depending on the alcoholic strength of each style of wine or spirit. Currently it is £2 per bottle of still table wine. However, for a bottle of Champagne, Cava, Prosecco or any other sparkling wine with an alcoholic volume of more than 8.5 per cent abv (which is pretty much everything), the duty rate is £2.56 a bottle.
The news for lovers of port wine isn’t better either; duty currently stands at £2.67 a bottle, whether you buy a £12 bottle of ‘late-bottled’ vintage port or a £40 bottle of the real McCoy.
Whiskey, gin, cognac and vodka drinkers must currently stump up a massive £7.41 per bottle as their contribution to the government each time they buy their favourite tipple. No wonder the tax-free cross-Channel ferries still do a roaring trade.
When you look at the two examples quoted, it is easy to see that by doubling the price paid from £5 to £10 a bottle, the consumer is actually getting nearly four times the value in the wine itself. The big question, however, is: does the consumer appreciate this from a quality perspective. Many experienced wine drinkers will say they do, and the majority will agree while falling for the ‘placebo ‘perception of the higher price paid.
Source: Choice Magazine – Click Here