We are often asked why we don’t sell any wine for a fiver, so I thought it would be interesting to show exactly what a bottle of wine costs. When I first had this explained to me at a wine tasting, it certainly made me think twice about the wine I was drinking.
The budget each year sees the Chancellor, merrily slap another vicious price rise onto a bottle of wine without anyone seeming to notice, but look more closely and you see how much the Government is actually making from our glass of wine.
So lets look at the figures and see what it really means in terms of our shelf price of a bottle of wine and who actually is making money.
The duty on a bottle of wine is now £1.81 plus its VAT, totalling £2.17, which is what you are handing to the Government just for the pleasure of purchasing the bottle, without actually enjoying any wine yet. You will then pay 20% VAT on the rest of the price of the wine.
Take your desired £5 bottle of wine, 53% of the price is tax or £2.64, when you spend £10 this drops to 38% of the price going into the treasury coffers.
Are you starting to see where this is leading?
To start with, the more you are prepared to spend on a bottle of wine, proportionally, the less you have to hand to the Chancellor.
Next there are some fixed costs associated with producing wine, notably bottling, shipping, storage, bottle, cork, label, packing, transport etc. This all adds up to roughly 80p per bottle. Below is a simple visual which shows how fixed costs and taxation affect differently priced wines.
What this really shows is that the value of the wine increases exponentially the more you spend on it, which means the quality will be proportionally better. If you double your spend on a bottle of wine, the actual value of the wine itself increase around six-fold, which is quite impressive I think.
In all these calculations, I haven’t actually accounted for anyone actually making a living out of the wine and there is the Vigneron, the Shipper and the Retailer at least, who all need their percentage.
So you can see that for a four quid bottle of wine,
a) No-one is ever going to make money, except the treasury and
b) The quality of the wine is going to be a tad limited.
Now for your eight pound bottle of wine there is a bit more to feed the families and you can begin to assume that there are some carefully tended grapes.
As prices of wine have continued to rise over coming years the heavy discounting of the supermarkets has made it ever more difficult for independent retailers to compete. Last year saw the folding of Threshers, Wine Rack, Victoria Wine group and more recently we watched the sad demise of Oddbins, one of the more colourful shops which introduced a new era of exciting wine.
The good news is that there is a new breed of independent wine merchants and wine producers who are bringing their expertise and knowledge of niche markets to us. Caviste Wines and Fullerton Estates are examples of these and the reason that Chilbolton Stores made a decision, earlier this year, to stop trying to compete with the supermarkets and follow the ethos of working with local companies who have a passion for good products.
So next time you are looking at Wine, think about what you are actually paying for, as for a few pounds more, you could be enjoying that glass a lot more.
Find out about our summer wines at the Chilbolton Stores Wine Tasting on Saturday 9th July from 12.30 – 3.00pm
Salut and enjoy your wine.
Based on an article written by Xenia Irwin for Cornwall Today