We’ve done a recent piece on the government’s idiotic taxation strategy pushing up the price on wine, now here’s one explaining how the weak pound has affected prices.

Just to clarify, for those of you didn’t know, the government has increased duty on wine under 15% abv by 36 pence (&vat) per bottle in the last 15 months - even more on wines over 15%! Beer and spirits have also been the victim of huge duty hikes too. Has this achieved the government’s desired goals and increased revenue for them? No. Quite simply, due to these price increases, people are drinking less and the government’s revenue from excise duty on alcoholic drinks has actually fallen sharply! Well done Darling, once again. That man really is an own goal specialist - not only has his strategy reduced revenue from excise duty on alcohol, it’s also contributed hugely to the demise of the on trade business in the UK with pubs and restaurants closing down on a daily basis, putting hundreds and thousands of people out of work where they were paying tax and vat, and onto the benefit system where they’re claiming money. In reality it’s costing the UK billions of pounds per year, but Darling just can’t see it.

Unfortunately, Darling’s clown like antics aside, this has had a desperate affect on the licensed trade and we’re seeing businesses closing down on a daily basis as a direct result.  The pubs are the hardest hit, then probably restaurants and hotels, but it affects everyone in the trade particularly independent wine merchants who have to compete with the supermarkets who can afford to sell at a loss.

Anyway, onto the weak pound. 15 months ago the Pound traded at 1.40 Euros or just over US$2 . Last month it was down as low as 1.07 Euros or  $US 1.39.

So a bottle of wine costing a merchant 5 Euros in 2008 was £3.57 plus £1.36 duty which is £4.93 plus vat (@17.5%) which is £5.79. This wine may retail at £7.99.

The same bottle still at 5 Euros in 2009 was £4.67 plus £1.60 duty which is £6.27 plus vat (@15%) which is £7.21. This wine would then have to retail at £9.99 - an increase of 25%.

However, as there’s a credit crunch worldwide, the producers have also put on their own price increases and shipping & packaging charges have also increased. Throw in the chancellor’s duty increases and you’ll see wine has increased by as much as 40%!

We’re already in June. VAT is set to revert to 17.5% next January, although there’s plenty of speculation that it’ll actually increase by even more - that’s around £5 a dozen on a case of £10 a bottle wine.

But to put all these consecutive price rises into perspective take a look at this illustration: a wine which cost £8 plus vat last year, cost you £9.40 per bottle, or £112.80 per case. Next year it will cost £10 plus vat at 18.5% which is £11.85 - £2.45 per bottle more, that’s an increase of £29.40 per case! And that’s before Darling increases duty yet again in the next April budget by his already declared 2% above the rate of inflation! So be wise and stock up in the next few months.

Did you know that the only place in the UK where vat is not applicable to retail alcohol sales is the bar in the House of Commons? And parliament has a wine cellar funded by the tax payer to rival any in the world? We may be questioning their personal expense claims but there are still plenty of perks to being an MP!

We wine lovers have seen a rollercoaster ride over the last 13 months. In the April budget 2008 the darling, Darling, increased duty on still wine under 15% by 12 pence per bottle, with an even bigger increase on stronger wine and champagne/sparkling wine.

Then in December, with the stealth of a Royal Marine Commando, he slipped in another 12 pence per bottle hike but kept it under the radar from the public by also lowering VAT at the same time. What’s wrong with that, you may ask? One tax is the same as another to the consumer. So it would appear on the surface, but that’s an illusion. To the retailer, whether a pub, restaurant or shop, they must charge VAT on the wine when they sell it, but can claim back the VAT they paid when they bought it, before forwarding the difference to the taxman, effectively the VAT on the profit. Now this is where it gets complicated - a bottle of wine can pass through several different ‘pairs of hands’ in the supply chain before it reaches the consumer. Each one charges VAT when they sell it,  and each one reclaims  the VAT on the price they paid for it (which is lower of course). The net result, regardless of how many people handle the wine, is that Customs & Excise get VAT (currently 15%) on the final sales price.

But by increasing the duty,  the price of the wine has increased and the retailer can’t reclaim it. Factor in an agent’s percentage and a retailer’s margin on this duty increase - again worked on a percentage basis, and the wine has increased significantly in price - and here’s the trick - the Inland Revenue although lowering the VAT rate to 15%,  are able to charge it on a higher price and make their money back! Now here’s the double whammy. The VAT rate is set to revert to 17.5%, if not even higher,  in January 2010 and you can bet the Chancellor isn’t going to give that 12 pence per bottle back! As a third whammy, let’s not forget the original 12 pence per bottle additional revenue  too.

This April he increased excise duty by the same amount yet again. And he’s pledged to increase duty each year by 2% over the rate of inflation so your wine is going to continue to increase significantly in price.

So how has all this affected prices?

They’ve rocketed! Duty on a case of wine back in 2001 was around £13.75, it’s now £19.26. Don’t forget, if it comes from outside the EU there’s an additional Customs Tax to pay as well.

That’s the duty.  Now the VAT. Let’s not forget, when the wine arrives in the UK, VAT is payable on the ‘value of the wine’ which also includes all it’s packaging, shipping and even insurance costs! And the masterstroke! VAT is actually charged on the Duty too!

What does this mean in real terms?

Well, the magical 3 bottles of plonk - say from South Africa or Chile - for £10, breaks down like this: DUTY £4.95, VAT £1.30, which is over £2 per bottle for the Treasury, which helps explain the government’s very lax attitude to the supermarkets’ highly irresponsible policy of promoting alcohol for sale below cost price. We’re talking about billions of pounds a year here for the Treasury.

So, back to the wine, you have £3.75 left, £1.25 per bottle, to cover the production of the wine and the producer’s margin, the glass, labelling and cardboard packaging, transport half way round the world, storage and transport in the UK, then the retailer’s margin!  Do you think the quality of the wine will have gone up or down? I thought it had already hit rock bottom and thought it couldn’t possibly get any worse.

What about good wine?

Well good wine has obviously been affected by the same duty increases, but because it costs more anyway, the increase is not so dramatic as it’s a fixed amount not a percentage. However this string of unwelcome increases has pushed prices up and consumers need to mentally readjust their expectations. You used to be able to buy a good wine for £10 and a fairly reasonable one for£5. That reasonable one is now more like £8 a bottle, due also to the weak pound, which is our next topic for discussion - the £ sterling has dropped about 30% in value in a year, which combined with duty increases has pushed up wine prices by 35%. It’s only thanks to some canny wine merchants who bought stock at the right time and have held their prices, that we’re not seeing even higher price increases.

South African wine - is it any good?

In a word - yes! There are some truly world class wines coming out of South Africa these days. However there are two main obstacles preventing the wine loving British public from getting their hands on them. The first is the South Africans like to drink the good stuff themselves! Perfectly understandable and something we can live with. The second obstacle is the domination of the UK wine trade by big corporations who insist on churning out dross and dressing it up as wine. We’re talking about a multi billion pound industry here, so we can all understand their motivation. Unfortunately it’s us, the average wine lover, who suffers - along with the other major victim in this, the small quality producer who makes his wine with pride.

Why can’t I just buy good wine in the local shop?

Anyone who’s been fortunate enough to travel to the South African wine country has almost certainly enjoyed some superb wine, and no doubt on his return wondered why the South African wine he ordered in his local shop, restaurant or pub was so awful. It’s the same message as always - the big brands, by their very nature offer poor quality at cheap prices and these dominate the UK trade. If you want good wine you have to look elsewhere. Unfortunately the brand culture dominates in the supermarkets, and national grocery chains.

You may then think you could find better wine in independent retailers? Well, in specialist wine merchants - possibly, dependant on the business model and integrity of the individual retailer. In independent grocers and off licenses - probably not. This is because the bulk wine trade in the UK is dominated by several huge companies who supply the vast majority of these retailers, with the inferior quality brands. Companies like Matthew Clarke Wholsale with a turnover in excess of £1 billion p.a., Waverly Vintners TBA with a turnover of £1/2 billion p.a., national brewers like Carlsberg, Scottish Courage and Coors all of whom pedal this poor wine into all their outlets. The pubs, restaurants and retailers are all under financial pressure and are pressurised by these big companies into stocking their wines. Unless you’re lucky enough to find one which is owned by a wine enthusiast, you’re likely to be offered a selection of poor quality brands from one of these major players.

So how do I find good quality wine, South African or otherwise?

Here’s the good news. There’s a new wave of small, independent wine merchants who are catering for the market who want to buy good wine, made by real people with generations of epertise, in wineries - not by machines in vast, sterile factories. 10 years ago in order to buy good wine you’d have to be lucky enough to live close to one of these merchants. However, nowadays with the advent of the interweb, it’s easy for everyone to find good wine at the click of a mouse and have it delivered to the door. And the best news - your local wine shop can’t get away with overcharging you because you can check prices nationally and make sure you’re paying the right price.

The good from the bad?

Of course not everyone on the internet is offering good wine! There are plenty of firms just offering hundreds of wines they’ve never even tasted, using descriptions and tasting notes straight from the back label! This wine may still be rubbish! There are also online ‘wine merchants’ who are really just one man trading from his bedroom!  They get a fancy website and take the customer’s order. They then try to buy the wine themselves and sell it on at a profit taking up to 2 weeks for your wine to arrive.

However it’s relatively easy to be sure you’re dealing with a reputable firm, that the wine’s good and has been correctly stored. Just do a bit of investigation on their home page. Look for a phone number. Look for someone who holds their wines in stock and offers next day delivery. Look for someone who’s actually tasted what they’re selling, and is choosey about which wines they offer, not simply offering every wine from each producer. And best of all look for a business that’s owned by a human being, not a corporation so you’re dealing with a person! These wine merchants do exist - spend some time tracking down a good one like www.goodwineonline.co.uk and you’ll be drinking good wine at last!

What do you think of Argentinian wine?

Is it all mass produced supermarket plonk at 3 for £10? If that’s what you thought, you may find this very interesting……

The wine trade in New World countries has recently suffered horrendously at the hands of the big corporations producing ‘wine’ on a massive scale. These international brands are made in sterile factories where they add up to 40 different chemicals to their ‘wine’, because the chemicals are cheaper to produce than the grape juice!  They spend next to nothing on the wine, cut every corner possible with regards to quality, then spend millions on marketing, building a brand to kid the British public that they’re enjoying a fashionable tipple. South Africa, California and Chile have all been victims of this con, and their quality wine trade has been hit hard and is only now recovering from the damage these frankly awful brands have caused.

Will it be the same for Argentina?

Well, if you buy your Argentinian wine in the supermarket and you pay less than £5, chances are you’ll think it’s terrible and will be put off Argentinian wine for good. However, if you go to a quality wine merchant and spend £10 upwards you’ll probably be drinking one of the best red wines you’ve had for ages. The fact is Argentina is producing wines to rival the best from anywhere in the world, and at the moment they are great value for money. There speciality is undoubtedly Malbec but they also make fantastic blends, and more recently, have started producing top class wines from classic varietals like Cabernet Sauvignon, Syrah and Chardonnay. Argentina’s white specialitiy is Torrontes, which makes some delicious floral wines with relatively low acidity, making them ideal as ‘ a glass of wine’ to enjoy in it’s own right without food.

How is this possible?

Well, for starters, Argentina has the Andes mountains running down it’s length which stops virtually all rainfall from the Pacific. This gives an annual 320 days a year of sunshine in many of the Argentinian wine regions, which lie between the same lines of latitude as the Cape in South Africa, all the wine areas of Australia, and Marlborough in New Zealand.  Warm, sunny days combined with cool nights, watered with snow melt off the Andes carrying minerals. Add to this, new investment with state of the art wineries and passionate family producers, and you have all the ingredients for making great wine. The major drawback with traditional, allegedly great vineyard sites such as Bordeaux, is the unpredictable weather, making a good vintage a rare thing and very sought after. In Argentina every year is a good year because the weather is constant, year in year out. As for the price, the cost of living and therefore the cost of labour in Argentina is low. In a lot of the good family owned vineyards the picking and sorting is done by hand - now that would cost a small fortune in a European country!

But how do I find GOOD Argentinian wine?

There’s still plenty of rubbish out there, peddled by the big corporations. To find good wine you need to avoid brands. Look for wines produced by family owned wineries who will take pride in their wine and use minimal chemicals and additives. Some names to look out for, who are amongst the best producers in Argentina include: El Porvenir de Los Andes, NQN, Benegas Lynch, and San Huberto Nina range.  Gouguenheim also make some cracking wines in the middle price range. Steer clear of anything cheap and mass produced. It’s well worth trading up a few pounds per bottle if you can, as the quality improves dramatically. For £10 you should get a great bottle of wine. For £25 you’ll get something very, very special.

Good afternoon everybody and welcome to Wine Wire, a blog dedicated to wine news, wine tips, recommendations on bottles of wine and where to buy them.  As always, we’re happy to receive your comments and thoughts, as well as recommendations. Our goal is to create a community around wine, something for you all to enjoy.

There’s an awful lot of poor wine around, made in large factories by faceless corporations - approximately 85% of the entire UK wine market would you believe? It’s our aim to champion the small producer who still makes wine as it was meant to be, with pride and passion. We want to give you an honest opinion of what the wine’s really like, and most important of all - the places where you can still buy good wine at the right price in this current market.

Let us know what you think, as we’re kicking off with reviews of what we’ve been drinking recently!

At last the truth about the supermarkets and inferior wines has been made public in the C4 programme Dispatches. The chemicals and additives which are put into these wines have to be seen to be believed. We independent quality wine merchants have been saying for years about their dubious strategies of over inflating prices to subsequently appear to offer unbelievable half price deals on wines which are frankly very poor quality. Basically deceiving the public, but because they are corporate giants and wine is a multi billion pound industry for them, they’re allowed to get away with it. You will be shocked when you read what is actually put into these cheap brands! Read about it from the Daily Mail’s coverage here

Or from The Sun here

Watch the Dispatches episode here