March 18th 2013, by Gavin
‘No further changes to alcohol duty’ is the usual line from George Osborne in his Budget speech. Don’t be fooled: with the Government’s duty escalator in place, wine duty will hit £2 a bottle, up 50% in 5 years. With 20% VAT on wine and duty, exactly 50% of a £6 bottle will be tax.
If you like wine from Europe, my little graph says it all.
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January 28th 2013, by Gavin
Listening to David Cameron’s important speech on Europe last week, anyone at the sharp end of the UK wine business must have raised a quizzical eyebrow at his unqualified support for the Single Market. In contrast to his laudable vision, tax on wine in the UK is completely out of line with other countries in the EU, and the gap is widening.
’So let me set out my vision for a new European Union, fit for the 21st Century,’ the Prime Minister said on 22 January.
’It is built on five principles. The first: competitiveness. At the core of the European Union must be, as it is now, the single market. Britain is at the heart of that Single Market, and must remain so…
’It is nonsense that people shopping online in some parts of Europe are unable to access the best deals because of where they live. I want completing the single market to be our driving mission.’
So why, then, is wine taxed so heavily in Britain compared to the continent?
As things stand, and it will be interesting to see what transpires when the Government’s consultation period on its alcohol strategy ends on 6 February, UK duty will hit £2 a bottle in the Budget on 20 March.
That’s 50% up from £1.33 in five years, whereas in the eight years before that it nudged up a respectable 15%. Duty on sparkling wine, including the now fashionable fizz made in England, will be around £2.55 a bottle. (We can bank on these figures, currently £1.90 and £2.43, because the Chancellor has persisted with the duty escalator that Labour introduced in 2008.)
Then there’s the double whammy of VAT on the duty as well as the wine, so the real duty cost will be £2.40 and £3 a bottle, for still or sparkling. And that’s without including the margin that retailers, merchants, pubs and restaurants have to add on top: believe it or not, duty costs more than the wine itself for the vast majority of bottles sold in the UK (that’s on anything under £7 retail – the average is a fiver – or £17 or so in a restaurant).
Meanwhile, and here’s the rub, there is no duty at all on still wine in 17 EU countries, including Germany, Italy, Spain, Portugal and Austria. In France, it’s 3p. To quote the Prime Minister’s fifth principle – fairness – how fair is this for Britain?
November 29th 2012, by Gavin
In case you missed it, the coalition government has announced plans to introduce minimum pricing on alcohol at 45p per unit. That would mean that a bottle of red wine at 13% alcohol (9.8 units) would have to be sold at no less than £4.41. Also in the firing line, and of more relevance to many people in Britain, are ‘multi-buy’ offers.
Whatever the pros and cons of this strategy, let’s look at what wine consumers get for their money. We all know that tax on spirits is high but what about wine? Well, you may be surprised to find out just how little is spent on the stuff in the bottle.
To illustrate the point, I’ve taken the figures from Robert Joseph’s article called ’Lifting the stone on the UK wine trade’ (The Joseph Report, 22/8/2012). As the editor of Wine Business International magazine and as the co-owner of a wine brand he sells to supermarkets, Robert is well qualified to comment and he kindly gave me permission to syphon off his numbers.
Above is the breakdown of who gets what from a bottle of European wine sold at retail in the UK (it’s even worse for non-European wine). It’s eye-watering stuff, especially for wine lovers who can’t afford more than the UK average spend of around £5.50 a bottle. Just a quid of that is spent on the wine, including the bottle.
As part of an unofficial grape farmers’ union, it’s grim reading too for the growers who supply the co-operatives and négociants (mega-blenders) that sell to supermarkets and other retailers.
May 10th 2012, by Gavin
What impact a new President might have on the French wine industry is unclear but the continued improvement in the exchange rate is good news for wine drinkers in the UK. Today’s rate of €1.25 to the £ is the best for some time. So we’ve put our UK prices back to the same level as a year ago, despite a duty increase in March.
Since January, we found that by going over the £10 a bottle barrier, sales fell away, so any help we can get with Sterling against the Euro to remain competitive is welcome. Rowan Gormley, the founder of Naked Wines, told me last year at the London International Wine Fair – where we were both speaking at a conference – that every time he put a price up by a pound a bottle, sales for that wine halved. I’d agree, based on some fairly unscientific analysis. For anyone selling wines at around £8 to £9 a bottle, where 40% disappears in UK tax and 10% in shipping and delivery costs, a pound either way makes a huge difference.
To view our wines, with UK prices now all under a tenner, here’s the link to the Best Sellers.
March 21st 2012, by Gavin
”Today, I have no further changes to make to the duty rates set out by my predecessor.”
George was at it again in this year’s Budget. Of course, the Chancellor could have said “Duty on alcohol will increase by 2% above the rate of inflation, as put in place by the previous Government” but the news channels would have picked up on that bit of bad news.
The official Budget document doesn’t actually say what the actual increase is. “As announced at Budget 2008, and extended in March Budget 2010, alcohol duty rates will increase by 2 per cent above the RPI. These changes will come into effect from 26 March 2012.”
Anyway, here are some numbers and a few updated graphs.
April 26th 2011, by Gavin
Given the current and planned future increases in UK duty (currently over £26 a case), we’ve had more demand for a Calais collection service. See my rant called ‘13 unpalatable truths about UK wine duty‘.
Our Calais Collection website will be up and running this summer but in the meantime, please email us at firstname.lastname@example.org with your requirements. The prices below, available from 5th May, show a saving on UK delivered prices of at least £2 a bottle (unless sterling falls below 1.11 €).
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.
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.)
May 25th 2010, by Gavin
Such is the demand for top Bordeaux from great years that the best wines from the two previous outstanding vintages, 2000 and 2005, have gone up substantially in value, despite the economic downturn. Here are my answers to 20 questions about the much-hyped 2009s.
1. Is Bordeaux 2009 ‘the vintage of a lifetime’?
I hope so, because we lost 80% of our crop in two hailstorms in May 2009. Apart from this minor detail, the weather was brilliant, all the way through to the end of the harvest in mid-October. I suppose that makes me well qualified to say, after watching the weather and tasting wines ‘En Primeur’ for ten years here, I have never witnessed such superb conditions for the harvest in Bordeaux and sampled so many outstanding young wines the following Spring. Many leading Châteaux have made their greatest ever wines, especially on the Left Bank.
That doesn’t mean to say you should buy the wines, if prices are too high. Fortunately, outside a relatively small circle of estates that could sell their 2009 production several times over regardless of price, there are many outstanding wines that are worth buying in 2009.
March 26th 2010, by Gavin
Captain Darling slipped another 10p on a bottle of wine in the Budget, taking the duty, and Vat on the duty, to £2. He also extended his ‘duty escalator’ of around 5% extra each year until 2015. On a £4.75 bottle of wine – higher than the average spend – over 50% is trousered by the government even now. By 2015, if Labour are returned to office this summer, duty will be over £2.50 per bottle as the escalator allows for duty rates to increase annually by 2% above inflation.