Neighbour’s £120,000+ Loss to Oddbins: a Drop in the Ocean
March 28th 2011, by Gavin
Fortunately for us, it’s not Château Bauduc that’s owed £152,000, but Château Lauduc. Hervé Grandeau, whose vineyard is 10 miles up the road from us, will have to accept 21p in the pound if the beleaguered chain survives a creditors’ vote this week, or less if not. Over 500 creditors are owed over £1000 each, including 100 wine and drinks suppliers who risk losing between £10,000 and £310,000. (Update, 4th April. As HMRC – see ‘The executioner’ below under CVA: will Creditors Vote Against? – refused to back the survival plan, Oddbins will enter administration today.)
Everything seemed fine last October and November, when Hervé supplied Oddbins with 50,000 bottles, or 15% of the production from his 59 Hectare Bordeaux vineyard. As a small-time negociant, he’d also bought wine from neighbouring Châteaux – about 20% of the total bill of €180,000 – to supply the chain.
‘Much better health’
There seemed little cause for concern towards the end of last year for outsiders, even if some people say that the writing was on the wall. Tim Atkin MW, one of the UK’s most authoritative wine writers, noted as recently as 24th November 2010: “Oddbins has not yet returned to its glory days of the late 1990s, when it was arguably the best wine retailer in the world, but it appears to be in much better health than it was two years ago, when the French company Castel sold the business to its current British owners.”
You can imagine Hervé’s dismay at the beginning of March, following weeks of not having his calls returned, when news broke that Oddbins was to close 39 of its 132 stores. “The business is being restructured,” read the ominous public statement.
13 Unpalatable Truths about UK Wine Duty
March 24th 2011, by Gavin
Psst. Don’t mention the wine.
The Chancellor of the Exchequer, George Osborne, didn’t say the word once in his UK Budget speech yesterday, on 23rd March. He simply said that there would be no further increases to alcohol duty beyond the measures already in place.
The media relayed the apparent good news as ‘no increase in alcohol tax’ but a few tweets later and a quick glance at the HM Treasury budget statement (page 61) showed that wine has gone up 15p a bottle, from this Sunday. Even a 4p annual increase used to get mentioned in every Budget overview. Now, a 15p rise doesn’t even get a look in. So, forgive me, but this calls for a rant.
It is, of course, all the previous Government’s doing:
“The government will continue with the plans announced in the March 2010 Budget (i.e. Labour’s last) to increase the rates by 2 per cent above inflation each year to 2014-15.” Budget June 2010
So we now have a situation where none of the three major parties will criticize the policy towards alcohol duty.
Here are 13 unpalatable truths about UK duty on wine:
1. The UK now has the highest duty on wine in Europe.
2. Only four countries (UK, Ireland, Finland and Sweden) have duty of over 50p a bottle. In France, it’s 3p.
3. From April 2000, our first spring here, to March 2008, UK duty on wine went up by a total of 15%. In the last three years, duty has gone up a whopping 36%.
4. Duty will increase by 2% above inflation each year until 2015. It went up 7.2% in this budget from £1.69 to £1.81. It is misleading though to say that wine has gone up 12p + VAT to the consumer, because every retailer, merchant and restaurant treats duty as part of the cost, just like the wine. Duty is charged upfront by HMRC, when the wine is taken out of customs, so it’s a real cost. Every merchant I know, except of course those that are selling ‘In Bond’, takes the cost of wine, plus the cost of freight/distribution and the duty as the basis of the cost of the wine, before adding their gross margin to cover their costs and to make a profit.
5. UK duty, and VAT on the duty, is over £26 a case at £2.17 a bottle. It will be £30 a case in two years at the current rate of inflation. VAT, which also went up in January of course, is charged on duty and the wine, so there’s a double whammy. (Update: in fact, the double tax increase in Q1 means that a £5 bottle on 1st Jan is up 25p to £5.25, a £7.25 bottle is 30p up to £7.55 and there’s 36p more tax to add to a £10 bottle.)
A First-Timer’s Guide to the En Primeur Week in Bordeaux
March 23rd 2011, by Gavin
I wrote this post for Livex – “The insiders’ guide to the Global Fine Wine Market.”
Robert Parker and other critics are in Bordeaux this week, getting to grips with the new vintage from barrel.
The rest of us – trade and press alike – will have to wait until the first week of April, traditionally the week hosted by the Union des Grands Crus or ‘UGCs’. Scores of other groups have sprung up over the years, while at least 30 of the most sought-after wines can only be sampled at the Chateaux themselves.
So here’s a list of the most popular tastings and those exclusive Chateaux, with the dates and the number of wines in brackets. At the end, I’ve jotted down my ten top tips.
March Newsletter
March 22nd 2011, by Gavin
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