Is Cheap Wine Good Value?

Cheap wine what do we mean by this? My Thesaurus says cheap means inexpensive, low-priced, economical, going for a song! What would you classify as a cheap wine?

As of today wine prices are on the increase again! The chancellor has stopped the Beer Duty Escalator, but wine and spirits remain on the relentless upward trudge of the Escalator, which this year sees a 5.3% rise.

Average wine £5 per bottle is this cheap wine?

An article published in the drinks business recently stated that the average price for a bottle of wine in the UK had broken the £5 mark., but how much did it cost to make that wine and what did the producer get? Break down this £5 into the retailer’s margin, UK Excise duty, VAT, packaging, and transport costs etc., it works out that of this bottle of cheap wine, only around ten pence went to the producer – so is this what we mean by a cheap wine?.

Taxes on cheap wine

So now UK tax (or excise duty) on alcohol is charged at £2.00 per 75cl bottle of light wine, so even on a relatively cheap wine, tax accounts for at least £2.40, £2.00 duty plus £0.40 VAT on the duty (yes tax on tax at 20%); plus any other VAT and customs duties where relevant, shocking eh!

Even more pressure on cheap wine when it sparkles

UK excise duty is even more of a killer for producing cheap wine when it is sparkling, not only are there the extra costs of trapping that CO2, but duty is £2.56 per 75cl bottle at 8.5% to 15% abv.

Ending cheap wine sales

The UK government want to end cheap wine and other cheap alcohol sales, but have ditched their plans for a 45p per unit minimum alcohol pricing as detailed in this BBC News article and confirmed in the 2013 Budget. The Home Office is also considering banning other ways of buying cheap wine such as multi-buy promotions, for example two-for-the-price-of-one.

Further evidence that it is price driving sales, not for example lower alcohol in wines, this recent article in the Drinks Business detailed how ‘5.5% abv wine-based drinks are booming in the UK due not to the low alcohol but’ … being cheap wine.