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Food -Wine – Over taxed over here- But Good Wine is Not Always the Expensive One

The real cost of…. a bottle of wine

How much do we pay for the wine?

 By Rhian Nicholson | Yahoo Finance UK – Thu, Oct 31, 2013 12:05 GMT

 When it comes to selecting a bottle of wine from the hundreds of different brands on the shelf, price is often one of

the key considerations. 

If you’re not after something to impress at a dinner party then is there really much point in spending more than £5

to help you unwind after a hard day?

Well, if you want your money to be going on the wine in the bottle rather than on tax, there is.

In the UK wine drinkers fork out an average of £5.03 on a bottle, according to the latest figures from Nielsen.

However, given that the UK has the highest tax on wine in Europe, the majority of your money isn’t going

on grapes, wine production costs or even retailer profit, it’s going straight into the taxman’s coffers.  

The taxes

In this year’s Budget in March the government raised the duty on each 75cl bottle of still wine with an alcohol

volume of less than 15% wine by 10p to £2.

It doesn’t matter whether it sells at £5 or £50, the amount is fixed.  If you’re a fan

of sparkling wine, the duty on this is even higher at £2.56 a bottle.

There’s also VAT at 20% of the total price of the bottle, so on a £5.03 bottle of wine you’re actually paying £2.84 in

tax. 

That leaves £2.19 for growing the grapes, harvesting, producing the wine, storing the wine, transportation and the

retailer’s and wholesaler’s cut.

Vendors’ cut

The retailer’s mark-up is around 35% of the pre-VAT price of the wine – say just over £1 – while the wholesaler

takes around a 12% cut on the pre-tax price so around 12p per bottle and transport from Europe takes another 15p

per bottle. 

So this leaves the winery with about 80p to make and bottle the wine and take their own, in this case

rather meagre, profit.

This doesn’t mean the wine will be terrible but it will be mass produced to meet tight budgets.

Double the quality for £2 more

Spend a bit more and you get a much better return on your investment for your taste buds.

A bottle of wine retailing at £6.99 comes with a £3.17 tax tag.

With a £1.75 retail mark-up and other costs remaining pretty fixed, the wine maker has £1.92 to make and produce

the wine, meaning you get better flavours in the wine.

At £9.99, this becomes even more pronounced with the winemaker getting £3.55 a bottle rising

to £6.32 at £14.99.

This pays for things like oak barrels, which add around 50p per bottle in costs, ageing and a

better vintage, which all add greater complexity to the wine.

So by splashing out £6.99 for a bottle of wine you’re actually getting more than double the value of wine than at

£4.99.

Equally going, up to £9.99 a bottle you’re again getting around double the value of wine of the £6.99 bottle.

Of course, the wineries also take a bigger profit on the more expensive wines but the overall you’re getting

significantly better value for money by trading up

.Getting value for money

Naturally, wine is all down to individual tastes but it pays to be canny when shopping in the wine

aisles.

Supermarkets are notorious for their half price wine offers so it’s better to stock up on your preferred

bottles if you see them on a deal.

However, it’s the 25% off across all wines sales are where you can really pick up the bargains – even though it’s

the suppliers, not the retailers taking a hit.

If you’re after good quality at low prices then a booze cruise is still your best option: there’s no duty on wine in

Germany, Spain, Italy, Austria, Portugal and many other EU countries while in France, it’s 3p a bottle.

For the equivalent of £5 you can be drinking something which would cost you pretty much double the price at

home.  

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