Wine prices set to drop as Brussels orders cut in duty

ireland's wine drinkers will shortly be lifting a glass to Brussels with the news that the Government is being forced by the European Commission to reduce excise duty on wine to the level of that on beer.

The total excise duty on a litre of still table wine is £2.15, one of the highest levels in Europe, while that on beer (4 per cent proof) is 62p. So the expected reduction in excise duty should cut prices by as much as £1.53 a litre, or £1.15 a bottle. The reduction in the price of a bottle of champagne should be as much as £2.76.

But it still won't be like life for those who live on the European mainland - in Brussels and France, cheap, perfectly palatable wine can be bought for less than £2 a bottle in supermarkets, and in wine regions for considerably less.

Government sources have confirmed that the Department of Finance received a "reasoned opinion" - the first step in legal proceedings - in August from the Commission's internal market directorate, then under an Italian, Mr Mario Monti. The Swedish government has received a similar warning.

The Commission argues that the Government is in breach of the Excise Duties Directive which bans tax discrimination between comparable, and competing, products - the wine and beer markets are regarded as essentially one.

The Government has until December to dispute the ruling, if necessary taking the issue to the European Court of Justice, but sources predict that the Minister for Finance, Mr McCreevy, will comply, probably in the Budget.

With revenue from excise duty on wine bringing in £65 million in 1997, the cost to Mr McCreevy is likely to be about £47 million in lost revenues - and much more in the long run if wine consumption continues its growth in Ireland.

More than 37 million bottles were consumed in the Republic in 1997, a 47 per cent increase on 1990. Last year we drank an estimated nine litres a head, but still have one of the lowest rates of wine drinking in the EU.

As recently as 1990 fewer than 30 per cent of adults were classified as regular wine drinkers. Last year, however, according to the Wine Development Board, one in two of us drank it regularly, with increasing consumption particularly among women, young people, and middle-income groups.