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:
- 81c goes to the government on VAT,
- A further €2.46 – the fixed duty on every 75cl bottle of still wine – goes 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.
…and you know where your paddle is. I’m just tuning in to say hear, hear. Thank you for putting all that in writing so clearly and concisely. It’ll give your customers and mine some facts with which to go spreading the word.
While I tend to think that I don’t know a great deal about wines, I’m reassured to know that at least I’m past Blossom Creek :) Recession or not, I almost automatically steer clear of anything under about a tenner in the supermarket because I’m expecting them, on average, to be plonk (and it’s interesting to see how the figures in those prices break down). If I want something nice I’ll try, if I can, to go to a specialist shop and get them to recommend.
It’s not, of course, that you can’t get good (at times very good) wine under a tenner, it’s just that the supermarkets make it so hard to tell what’s a legitimate offer or good value.
I am struck by the similarities here with the recent Hugh Fearnley-Whittingstall programme on the chicken industry in the UK, and his fight with Tesco’s to improve the growing/farming conditions for the poor old chicken… If everything is driven by price then we wont get anything worth eating or drinking – which is not to say that we shouldnt be price-conscious – but the various steps in the supply chain have to be able to afford a level of quality and still survive…
Unfortunately Brid, the likes of Tesco respond to only one thing – customer purchasing actions.
I sincerely hope the economic downturn doesn’t undo a lot of the pressure put on supermarkets in recent years to source better quality at a fairer price – be it the organic movement, free-range produce, Fairtrade, etc.
Woodward’s observations in Decanter would suggest they’ve thrown the baby out with the bathwater in their wine aisles which is a terrible shame.
Thanks for your comments.
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