Darling Goes over the Top

By our man in the trenches

Times are tough for the UK wine trade. The pound has slumped against the euro, the cost of wine at source and fuel prices have shot up, and consumers face the credit crunch.  

If that wasn’t enough, the anti-alcohol lobby is winning the media battle, with middle-class binge-drinkers being portrayed as a drain on the nation’s resources.  So the same government that brought in 24-hour drinking (for health reasons?) softened the way for the assault on responsible wine lovers.

Britain now boasts the highest rate of duty on wine in Europe.  The Chancellor of the Exchequer slapped a record 14p on a bottle of wine in the Spring budget and pledged to increase duty above the rate of inflation over the next four years. 

 

Duty on a bottle of wine is now nearly £1.50, plus VAT on the duty as well as the wine, while there is no duty at all in Italy, Spain, Portugal, Austria and Germany, while France fleeces its citoyens for all of 2p a bottle.  And yet we manage to remain sober – well, most of the time.

Captain Darling even claimed that wine drinkers are better off under this Government:  “Alchohol has become more affordable. In 1997, the average bottle of wine bought in a supermarket was £4.45 in today’s prices.  If you go into a supermarket today, the average bottle of wine will cost about £4.00.”  

Perhaps, but what he didn’t say was that the government has trousered 37p more per bottle in duty in that time, before the new rate came into being.  Producers have been forced to cut costs, and two thirds of wine sold in Britain today is on ‘special offer’.

50% tax on an average bottle

On a £4.20 bottle on sale in the UK, which is the average price paid for a bottle of wine, £2.10 goes on duty and VAT, then there’s shipping, storage and distribution, plus the agent and the retailer’s margin.  After the bottle, cork, capsule, label and packaging (we spend 50p on all these) that leaves rod all for the wine inside the bottle.

 

From £1 to £14

And duty doesn’t just affect retail prices.  A wine merchant friend of ours buys a house wine with a nice label from a co-op for £1, adds 50p shipping and delivery costs, then £1.50 duty, and adds a perfectly reasonable 25% margin on top.  So he sells it to restaurants for £4.00 ex-VAT, who need to make a 66% margin.

The wine’s therefore listed at £12 before VAT: £14 including VAT.  Without the duty element, as on the continent, the bottle would cost half that – and the merchant and the restaurant would make the same percentage margin.

(Toot toot – it makes our £8 Chateau Bauduc Bordeaux Blanc Sec, sold direct, look even better value at Rick Stein’s for just £19 on the front page of his list at The Seafood Restaurant, or for £20 chez Gordon Ramsay. If you can get a table, that is).

Britain has a fine tradition of wine merchants offering choice and value, but the increasing cost of importing wine (£1000 in UK duty for a pallet of 56 cases, plus the VAT later) means it will be harder times ahead.  One wine merchant who bought wine from us over a year ago has yet to pay the bill.

Yet with the low pound, there’s hope:  the UK is now a great tourist destination.  If only wine wasn’t so bloody expensive.

This is sent to friends on our mailing list.