As a consumer myself, I feel it’s important to know about the factors affecting cost and why we pay what we do. Unfortunately, here in Ireland, you can’t just pop down to your local vineyard and pick up the latest vintage of Paddy’s “ah, dat’s lovely” Shiraz. So already, we’re at a bit of a disadvantage. And even if Paddy did have a vineyard, costs will always be incurred. Such is business.

Starting with the vineyard, there is a cost to acquiring sites, and those in the best location will often fetch a higher price. Some vineyards may be very steep, so grapes might need to be handpicked, as opposed to being mechanically harvested. The cost and availability of labour varies from country to country. Yield size and grape selection also plays a big role in supply, and will thus have knock on effects when it comes to the demand versus supply. For example, low supply and high demand will heighten market price.

The winery and the equipment used can contribute to fairly significant overheads, and it can be expensive to store wines for aging, as well as tying up capital. Then there is the packaging of the wine (materials and labour) and building transport costs into each bottle. Obviously it’s more economical to transport these directly and in bulk.

Just before the retailers margin, we have government duty and then VAT added. This is how it works:

•    €2.46 flat-rate duty on every bottle, €4.92 on sparkling wine
•    21.5% VAT (this is on the whole cost, including duty)
•    At €19.99, tax represents 30% of purchase price
•    At €9.99, tax = 42%
•    At €7.99, tax = 48%
•    At €5.99, tax = 60% & less than €2 gets spent on the wine inc. packaging and shipping.

Therefore, more often than not, you’ll be getting a drastically better wine at €7.99 than you will at €5.99.

What is it with supermarkets and half price wine? Every time you walk into a Dunnes or a Tesco there’s some obscure wine piled in a floor display the size of a small semi-D, plastered with half a rainforest of brightly coloured “HALF-PRICE!” signs. Supervalu have started it too and I’ve even started seeing it in petrol stations!

Let’s cut to the chase here. If any product is half-price, there’s only a couple of possible reasons:

1. The retailer is literally flogging it, at a loss, due to short-dates, over-stocking or end-of-line.
2. The producer is flogging it through the retailer, at a loss, for the same reasons as above.
3. The product was hideously over-priced to begin with, with either the retailer or the producer or both taking an obscenely gratuitous margin, and is now at it’s true value.

Now call me cynical, but I don’t think Tesco wracked up profits of over €3 billion (yes, THREE BILLION, check the link) last year giving away their stock. And this practice of “half-price” and “2-for-1″ is way too common to not make an impact on their bottom-line if they were sucking a loss. Sorry, I’m not buying it, if you’ll excuse the pun.

So option 2 is the producer. It’s undeniably true that with bulk production and mass-market demand a lot of wine is produced as a commodity – and commodities face the stresses of supply and demand – but a wine legitimately standing up to a price tag of €14 retail does not need to be dropped to €7 to sell. Remember that on a retail price of €14, €9.06 goes to the retailer and supplier after duty and VAT; on a retail price of €7, this figure drops to €3.30, to cover the costs of packaging, shipping, retailer overhead, profit and the wine itself. The revenue drop by the producer would be closer to 90% than 50%.

Now, with admittedly Sudoku-like deduction, we’re left considering the ghastly possibility that the Yabbajabbawarra Creek Reserve Semillon Chardonnay perhaps isn’t really “worth” €14. But in fact it probably stands up ok for a €7 wine, where, back to the tax structure in Ireland, somewhere around a euro ends up back in the winery.

My issue is not with cheap, or bulk production, or unashamedly commercially-styled wines – they’re the stuff we all start on and will always provide a low risk way in for new wine-drinkers. But the blatant exaggeration of recommended retail prices, on wines that are here today and never seen again to stand proper scrutiny in the market, really gets my goat.

So the next time you can’t get to the Andrex for the aisles of half-price wine in your way, ask the nearest section manager when the wine was actually, ever, truly and honestly, selling for the full retail price. I bet you they’ll shuffle away, sheepishly declaring they’re on Condiments this week.

A cutting editorial this month from Decanter Editor Guy Woodward has prompted me to write a long overdue post on the real price of wine in Ireland.

You’d think, at a time when many consumers are reining in their eating-out bill in favour of entertaining at home, that the supermarkets would see it as an opportunity to encourage us to ‘trade up’ on our wine spend and splash out on bottles we wouldn’t be able to afford in restaurants. Not a bit of it. Instead, the supermarket shelves are full of cheap plonk, intended to entice bargain hunters in-store, where they’ll spend more on other goods.

Such cynical practice gives wine lovers a good reason to stay out of supermarkets. Indeed one prominent UK critic is considering boycotting all wines from Tesco, such is his disillusionment at the way it has undone all the good work of the last two years by replacing its more innovative brands with what must be very close to being loss leaders.

I commented just before New Year’s on a €6.99 bottle of Cava in Lidl, on which all but 83 cent would be paid in duty and tax to the Irish Exchequer. Lidl are far from the only culprits. Tesco and Dunnes both stock still wine for under €5, with the former today stocking a Caravelle EEC Red Table Wine for €4.59.

To put this in context, on a retail price of €4.59, 81 cent goes to the government on VAT, with a further €2.46 – the fixed duty on every 75cl bottle of still wine – going on excise. This leaves less than €1.32 for the bottle, the labels front and back, the cork or screw-cap, the transport from Europe, the bonding, storage and/or excise clearance charges once in Ireland, the transport within Ireland, the manufacturer’s profit, and finally any profit taken into the equation by Tesco themselves.

Oh, and sorry, I forgot the actual wine in the bottle which one assumes has at least some economic value in the process. Just how little of the €4.59 actually goes on the wine?

We need to be careful, however, in jumping on the ‘down-with-this-sort-of-thing’ bandwagon. The supermarkets provide a cheap and convenient entry point for new wine drinkers, as they nervously navigate new horizons. They simplified the labelling and championed the funky, accessible brands that fuelled a nation’s new craving throughout the 1990s, as consumption in Ireland rose from 1.5 million cases to 4.5 million within the decade.

Nevertheless, Woodward’s critique is valid for the detrimental impact on quality and, ultimately, choice that the supermarket ‘value war’ precipitates. To spend even €9.99 on a bottle of wine provides over 430% more for the price of the product. Taking out the virtually fixed costs of the packaging and transport, and you’re more like 700% more on the actual wine inside the bottle.

This is the true cost of wine, but the one overlooked by bamboozled consumers as they face row-upon-row of price-driven plonk.

Thankfully, with a maturing population of the 90s wine boom comes discernment. If you’ve got to the bottom of this post, you’re already past the Blossom Creek.