members login email  password  
quick event search
location  
age range
you are here: WineDater Drinks Cabinet 1
Thursday 28 August  

14th April 2008 
Wine – How far does a fiver go?

We all look at the supermarkets’ and off-licenses’ shelves, see so called ‘bargain’ wines and think “£4.99! Great value!”
 
But is it?
 
 
 
What are the costs involved in producing a bottle of wine and how much is the wine you are drinking worth?
 
You may think that the £4.99 bottle of wine you’ve just bought is £4.99 worth of wine or something around there anyway, more to the point maybe some of us don’t even think about the cost at all and just drink it.
 
Well I’m here to tell you that the cost of your wine is nowhere near the price that you paid for it, with most of the price of the cheaper bottles on offer going on duty and VAT alone.
 
 
 
The journey of our £4.99 bottle of wines starts in the sunny vineyards of South East Australia. The grape grows, is harvested, wine is produced, shipped over to the UK, sold to a retailer and finally ends up in your shopping basket. (This has to be the most simplistic description of wine production ever!)
 
Think about this journey and just some of the factors that need to be considered, accounted and PAID for by you, the customer.
 
Labour & equipment costs in vineyard (viticulture – growing the grapes)
Labour & equipment costs in winery (vinification – turning grapes into wine)
Bottling costs
Labelling and packaging
Storage
Transport & shipping costs
Duty & VAT
Marketing & PR
Importer/wine merchants’ margins
Distribution costs
Wholesaler, retail outlets, bar or restaurant margins
 
So what kind of costs are we talking about for our £4.99 bottle of wine?
 

Duty
£1.46
VAT
£0.74
Importer’s Margin
£0.60
Retailer’s Margin*
£0.25
Bottling & Packaging
£0.25
Other Factors (see below)
£0.30
 
 
Actual Wine
£1.50!!!

* This margin is quite low as I’m referring to supermarkets however you will all know that if you buy a bottle of wine in a bar or restaurant the profit margins are usually hiked up to around 300%!  I find it rather galling to order wine in a restaurant unless someone else is paying!
 
Other Factors
This is quite conservative as there are many other factors that come into play when producing a bottle of wine. To name just a few some producers need to consider the right type of maturation process for their wine and if this involves oak it may be quite expensive. 
 
Did you know that one new French oak barrel can cost in the region of £400? Most wine producers use a percentage of new oak for their wines each year which can be pretty costly! 
Equipment will need to be replaced from time to time and winery equipment is usually big and bulky and doesn’t come cheap. Some of the smaller producers will maximize their costs by grouping together and buying a piece of machinery between them or there will be a mobile unit that go from winery to winery. This however in itself will cause issues if all the producers are picking and want to make wine at the same time.  Either way, there’s cost that you’re paying for!
 
Then you have to consider the costs of head office/s, shipping, storage in the UK (usually at a bonded warehouse), sales, marketing & PR, overheads for both the wine producer and the importer, and finally distribution. So although at the moment our sums say the wine in a bottle of £4.99 is worth around £1.50 – as you can see, it’s much more likely to be less.
 
I’m not saying all £4.99 wine is poor quality, far from it. You can find some good everyday drinking wines for this price however it is very unlikely that you will get a bottle of wine that would age well or be of outstanding quality. We are also not talking about ‘special offer’ wines or BOGOFF (buy one get one free) wines that have been discounted to £4.99 but wines that are usually sold at this price point.
 
However, buy a bottle of wine at, say, £9.99 and most of the ‘non-wine’ costs will stay the same as illustrated above so you could be getting something like £6.50’s worth.
 
A little maths:
£1.5 (wine) / £5 (price)    = 30% of the price is going on wine
£6.5 (wine) / £10 (price) = 60% of the price is going on wine
 
Which offers most value?
 
Something to think about when you’re buying your next bottle of wine!
 
WineDater is a wine tasting experience for singles, it’s about
meeting new people, trying new wines, then it’s just a
matter of taste www.winedater.co.uk
e-mail: info@WineDater.co.uk

a company registered in england company number:
6365141, registered address: office 404, 4th floor, albany
 house, 324/326 regent street, london, w1b 3hh
VAT number: 925487984
privacy policy, terms and conditions
 WineDater supports responsible drinking –
www.drinkaware.co.uk