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.