A recent BBC investigation into where the money goes when you buy a £4.99 bottle may have shocked wine tipplers: the first £2 of every bottle goes directly to HM government as excise duty (with an extra 11p tacked on if the wine originated outside the EU), then a further 20% of the total price is also taken by the tax man as VAT. So the remaining £2 or so has to cover an awful lot: not just the retailer's profit (estimated by the BBC at well over £1), but also the profit for the wholesaler, and the cost of the bottle, cork and label, and of shipping the wine around the world. The BBC reporters concluded that what's left to cover the cost of the actual liquid in a £4.99 bottle of wine might be as little as 20p.
Wednesday's budget changed the sums again however, slapping an extra 5p on excise duty. It seems pretty straightforward than when the budget raises the duty on petrol and diesel, the price rise appears almost immediately on the pumps. Similarly, when the government imposed the 'green levy' on energy companies, that extra cost was immediately passed on to consumers in the form of higher fuel bills. So will those £4.99 wines now suddenly become £5.04 when the new duty rate kicks in?
Of course the answer is no. The 99p price point is still a sacred cow to most retailers, certainly the big players fighting to sell huge volumes of wine, often as an inducement to get shoppers through their doors. But after the Chancellor's latest 5p increase the taxes will still have to be collected, the cost of shipping and bottling won't change, and you can bet your bottom dollar that the retailers will not volunteer a 5p reduction in their profit margin. So if the price of those wines remains at £4.99, just where will that extra 5p come from? Just who will be squeezed until the pips squeak? You've got it: the man or woman at the start of the supply chain - the winemaker. The supermarket buyers will once again be looking to drive down the price they pay for the stuff that goes into the bottle. Look forward to your next £4.99 bottle containing not 20p worth, but just 15p worth of wine.
Those extra 5ps the tax man is collecting from every bottle must come from somewhere, and the only sensible place is from us, the consumers. Those of us who love wine should insist on paying that extra few pence. That is the only way we can preserve the quality of what's in the bottle.
Indeed, I'd far rather that those £4.99 bottles went up not to £5.04, but to £5.25. That would be such a small increase per bottle that it wouldn't really hurt us too much, but if the extra 21p could go directly to the winemakers to pay for better wine we could, at a stroke, double the quality of what many of us drink. Literally.Suggest a correction