Wine is quite a unique product because of the tax it is subjected to. With the rate of duty being a fixed cost on every bottle sold (for which VAT is also payable), there is a ballpark price to pay where you can be assured, provided the retailer is pricing honestly, that the required investment is going not towards government, transport and packaging costs, but into the wine itself. Generally speaking, paying €5 or €6 for a bottle and you’re in for something that won’t be terribly exciting or at worst something pretty nasty. You’ll always be able to buy bargain basement wine, but the cheapest wine will never be the best value wine.
Tax is a problem facing every winery around the world who are looking to sell into Ireland and be competitive. But at the minute it is extra difficult for the likes of New Zealand and Australia. They are producing wines in economies that are performing well so they are high-cost economies (Australia probably more so than NZ), which from their point of view is not good for exports. The United States suffers from the same thing. This is part of the reason it’s so difficult to find an €8 bottle of Californian Pinot Grigio to compete with an Italian alternative. Add higher transport costs to that and you start to get the picture.
Strong currencies, the Australian dollar being the biggest culprit, and a weakened euro means that value for money particularly for sub €10 wines is taking a bashing. In fact, certainly in Ireland, I think it would be safe to say everyone, supermarkets included, has been struggling to offer the same kind of value in the sub €10 price bracket from these countries that would have been achievable in the past.
A price rise of €1 might not deter people going for a €16 bottle of Barossa Valley Shiraz over a €15 bottle of Rioja, afterall many will still shop on the style of wine they are after, but a lot of people will find €8 is better spent on a Spanish or Italian wine. The difference €1 makes at the lower price end is comparatively more significant in terms of that all important price vs quality ratio. The range of quality in the €6-10 price bracket is bigger than that in the €12-16 price bracket. Whereas the best value might be found between €10 and €15, each euro will need to work harder in the €5 – €10 bracket.
I have no doubt that Australia and New Zealand still offer great value. Many of my favourite wines are still from there, but for my money I’d be off to Chile, Spain, Italy or France for the cheaper wine. The likes of Rueda is offering terrific value alternatives to the Oyster Bay’s of this world, and the Languedoc is now throwing up robust reds that would beat many Australian’s in an arm wrestle. These things always go in swings and roundabouts, but for the foreseeable future I can see demand for the aforementioned New World wines falling only to the benefit of the less expensive European winemakers.
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