Half-price wine: too good to be true?

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.