The Dirty Secret of the £5 bottle of winePublished on February 13, 2020
When it comes to buying wine, how much should you pay. According to a recent study by drinks specialist, Harpers, over half of UK wines drinkers wouldn’t spend more than £5-6 on a bottle of wine.
Are they right? Are we paying too much for a decent bottle? Does quality always increase in line with price?
Let’s look at a typical £5 bottle of wine in a UK supermarket such as the Echo Falls Merlot which is available at Asda for £5-00. Breaking down the costs for the bottle, Wine duty in the UK is £2.23 – that is a flat rate on a 75cl bottle of still, unfortified wine, whether you pay £4 for that bottle or £400, and it has more than doubled in the past 20 years. Then there is VAT on the duty and the wine itself, so you are at £3.06 before you add further fixed packaging costs (bottle, cork, label) of approximately 40p and logistics (shipping/transport) costs of 25p. With a realistic margin across wine producer, wholesaler and retailer of £1.00, this leaves just 29p for the cost of the wine itself!
Bottle cost: £5.00
Excise duty: £2.23
Total margin: £1.00
Cost of wine: £0.29
If the wine drinkers in the Harpers study, who pay £5 for their wine, subtracted the tax/duties and realised they were paying 29p their wine, they might be tempted to spend a little more – and, if necessary, to justify it by drinking a little less! If they spent just £5 more and paid £10 a bottle rather than £5, the amount of tax/duty paid falls from 60% to 30%. Ewan Murray from the Wine Society confirms this. “The more you spend, the more (proportionally) goes to the actual value of the wine, and you can taste that difference.”
Drink less but better sounds like a good wine resolution for 2020! Winecroft members know this already.