State's cut above the rest
It seems ridiculous that something that earns the producer less than a euro ends up costing the consumer more than 10 times that State's cut above the rest, writes JOHN WILSON
At one time in this country, wine was the love that dared not speak its name. The mere mention of the word brought about either a sneer or a giggle from the rest of the population. Wine was seen as an elitist drink, supped only by the very rich, the pretentious, or foreigners. Judging by the commentary on the massive hike in wine duty, not much has changed.
Arguing against the recent increase is asking for trouble. Compared to the financial misery that many are going through at the moment, and to the swingeing cuts faced by many following the Budget, wine-drinkers can expect little sympathy. Although this is certainly an attack on the middle classes, these days a wine drinker is more likely to be female, between the age of 25-40, and from any social background. I also know that for many hard-pressed couples unable to afford to go out, wine provides a little simple pleasure with dinner on a Friday night.
I received many angry complaints from the public and trade about the duty increase. The most heartfelt were from two foreigners; both from countries that consider wine a natural part of everyday life rather than a luxury. I am not sure why wine was singled out for such harsh treatment by the Minister; possibly because it is not produced in this country. The increase seems to suit the multiples, which can afford to use alcohol as a loss-leader whenever they chose, knowing they can make up the shortfall from other products. Expect to see further job-losses in the hard-pressed independent sector.
You may wonder how so many retailers were able to keep their prices unchanged prior to Christmas (and some still have). Some in the wine business saw a big increase on the way, and duty-paid large quantities of wine before the budget. But by now most of these stocks are exhausted and the increases have started to kick in. The buyer for one of the major retailers told me he expected consumers would continue to pay exactly the same for a bottle of wine as before. The difference being the wine they drink will not be as good.
Once the increase of 81 cent (excluding VAT) in duty is included in the cost of wine, it will mean an increase of €1.50 or more on a bottle of wine currently selling for €8. From that €9.50, roughly 50 per cent will go to the Government. I give a rough breakdown below on how the price of a €10 bottle of wine is calculated. It seems ridiculous that something that earns the producer less than a euro (including bottle, cork, label and case) ends up costing the consumer more than 10 times that. However, that is the logic of our current system.