Whilst there are many honest everyday wines available on the high street, you might be interested to understand the economics of wine buying. I have been surprised when talking to customers how unaware many of them are about the duty and tax situation.
Having read this article, I hope you will be more inclined to spend a little more on your wine in future, on the grounds that you are getting much better value for money.
I identify a cheap wine which at source may cost well under â‚¬0.5 but with the negociants/growers margin and the cost of the bottle, cork, label and foil, will amount to approximately â‚¬1 (Â£0.71). This is at the very cheapest end of the market and is roughly what we pay for our basic house wine, the Vin de Pays du Gers and de l'HÃ©rault.
This bottle, as part of a case, requires shipping from the south of France at an approximate cost of Â£0.15. To this we then add the duty of Â£1.23 per bottle which is payable as soon as the wine arrives in the UK. This alone can play havoc with cash flow. (The amount of duty is higher if importing from outside the EC and considerably higher (Â£1.65) on sparkling wine and Champagne, and then at a ridiculous level for spirits!).
The cost of the wine to The Oxford Wine Company is Â£0.71, plus Â£0.15 (shipping), plus Â£1.23 (duty), which gives a total of Â£2.09. A typical mark-up is 30% before any discounts are given. This takes the amount to Â£2.99 on which we then have to add VAT.
The grand total, therefore, becomes Â£3.51 (in fact, we currently sell the wine at Â£3.35!).However, if you pay three times more for the wine i.e. â‚¬1.50, plus the cost of the bottle, etc. the cost will be â‚¬2.00. By adding the shipping and duty, which is the same amount regardless of the quality of the wine, we then have a cost price of Â£2.77. By adding the margin and VAT, as outlined above, the price then becomes Â£4.65.
In conclusion, the wine which is three times more expensive at source is only just over 30% more expensive on the shelf but you are getting an awful lot more for your money. There is no doubt that some of the best bargains are found in the Â£4.50 to Â£6.50 price range and I hope that the above illustrates why this is the case. You must also consider that many cheap wines are rather unstable with a limited shelf life and most importantly, tend to lack character and individuality.