Yes, yet again we have more price increases on the way. With VAT having been restored to 17.5% a case of wine at £10 per bottle now costs an additional £2.50, which goes straight to the Treasury. But this is just the tip of the iceberg. Further increases are imminent. From Darling’s budget two years ago, Excise Duty is set to increase by 2% ‘above the rate of inflation’ which is currently at 2.9% this month. That means an additional 5% Duty which is 8 pence per bottle plus VAT of course, on wines under 15%abv. Wines above this, and sparkling wines, will increase by even more.
So this will mean Excise Duty on a bottle of wine from an EU country will be approximately £1.70. Wines from outside the EU also attract a separate Customs Tax. So if a bottle of wine sells for £10 there’s £1.49 VAT and £1.70 Excise Duty – £3.19 going straight to the Treasury. That’s £38.28 on a case of 12!
If a wine sells for £5 a bottle, there’s still £1.70 Excise Duty with 75 pence VAT – £2.45 in total taxes. If you allow for production costs, bottling, labelling, packaging, international shipping, UK transport, importer’s margin and retailer’s margin – all coming out of the remaining £2.55 – then how good do you think a £5 wine will be? According to renowned wine journalist Malcolm Gluck, the supermarkets work on a margin around 33% so they would be making £1.67 per bottle, leaving just 88 pence to cover all the other costs including the producer’s! So we can clearly see how the UK government and the supermarkets are responsible for driving down the quality of wine available in the UK and at the same time driving wine producers out of business.
Sadly the days of buying a decent bottle of wine, made traditionally with minimal additives, for £5 are long gone, never to return. £10 is now the benchmark figure for a reasonable wine, and closer to £20 for something special. It’s likely that taxes will keep increasing year on year so if you’ve got some spare cash now’s a good time to buy some decent wine and lay it down.