Category Archives: Opinion

What we think about wine and the wine trade

Devious dealings

So, if tax alone is nearly £2 how do the supermarkets put a bottle of wine on the shelf at £4.00 – or even less? There’s no single answer of course (except that it’s not magic), but read on to find some of the ways it’s done, both fair(ish) and foul.

As we all know, supermarkets are big operations and can buy a lot at a time (reassuringly referred to as ‘buying power’). Wine makers, like most other producers, welcome large orders: the lower marketing and admin costs allow them to offer better prices and these can be passed on to the retail customer. In fact, Manor Wines does something very similar through its buying consortium – a group of independent wine merchants with similarly high standards who work together to buy wines at the most advantageous prices.

There are clear guidelines on how retailers may promote ‘special offers’, for instance the ‘Code of Practice for Traders on Price Indications’ from the Department of Trade and Industry (DTI), but these are almost impossible to police effectively, particularly with wine. Take the case of The Offer That Never Was. A wine is offered for sale at a much inflated price, say £10; it doesn’t sell at all well but a big noise is then made offering it at “half price: only £5!”, and this is where the bulk of sales are made – on the back of the supposed reduction. The wine may only be worth £5 at best, and the DTI specifically requires that the comparison should only be made “in the reasonable expectation that [the wine] could be sold by you at the higher price” – but who can prove that? Dissatisfied drinkers comfort themselves that “at least it was cheap …”

Dodgier yet, a brand is established and sold at a reasonable price. It builds up a following of customers, but when the “special offer” is announced the contents behind the brand will not be the same as the full priced wine. It will be from similar grapes but of lesser quality. Any perceived discrepancy in quality can be passed off as vintage variation or the vagaries of a natural product. Known as ‘de-engineering’ to those that practise it. Lovely.

A favourite with big retailers: simply charge your suppliers to sell their products! Supermarkets pressure wine makers to pay them fees to list their wines.

Additionally, they may pay such a low price for the wine that the maker has to save money elsewhere, perhaps by paying the workers badly (South Africa and South America have been particularly vulnerable here). Or by not investing in the future of the winery, and when quality inevitably falls and/or the winery goes bust, they move on.

And then there’s the good old loss leader: sell your wine at a loss, it brings in business to other sectors of your store which will create enough profit to cover the loss in the wine aisles, and soon you will have disposed of any local businesses that cannot afford to play this game.

It’s enough to make you turn to drink …

Wine that costs too little

There is a point where good value becomes just too good to be true.

It pays to know that the fixed costs in a bottle of wine remain pretty much the same for the humblest eastern european plonk to the grandest domaine in Burgundy.

These prices are approximate but are certainly close enough to make the point:

Bottle, cork, label, shipping, storage say £1.50

Duty £2.00 (yes, that’s £2.00, as of the 2013 Budget)

VAT £0.70 (20% on ALL the above … even our tax is taxed!)

This means that before you’ve paid for any wine at all the bill is £4.20 So, if you’ve gone down to the supermarket and paid £4.50 for a bottle of “good value,honest, everyday” wine you’ve actually spent 30p on the liquid you’re going to imbibe – and it’s not surprising if you’re not as happy as you might be.

On the other hand, if you pay about £5.50 you will have paid 3 times more for the wine, and given the winemaker at least a chance of putting something worthwhile into the bottle.

So spend a little more than the bare minimum on a bottle of wine – you (and the winemaker) are worth it. And funnily enough, a little over £5 is the price our wines start at: in our view you can’t have a decent drink for anything less.