Bargain bottles

BROWSING THROUGH the wine shelves of a supermarket, I spied a Spanish wine selling for €11.99. Having visited the winery recently, I know that the price ex-cellars is a mere €1.75 per bottle. I suspect the supermarket concerned will have received a further discount on that price – so how did a wine increase almost seven-fold in the short trip from Spain to Dublin? Either someone is making a whopping profit or, more likely, the wine will shortly appear as a “half-price special” or at a 30 per cent discount. I am frequently asked why wine is so expensive in this country and, contrary to what many seem to think, most of those working in the wine trade do not make a fortune – many are currently struggling.

The biggest factor is tax. We still have one of the highest rates of duty on wine in Europe, €1.97 on every bottle. Sparkling wine is double that. Combine that with our 21 per cent VAT and you can see the main beneficiary of our wine drinking is the Government. In producer countries such as Spain and France, there is little or no duty on wine, and a far lower rate of VAT, which accounts for some of the disparity in prices. As an example, Hardy’s VR range of varietal wines is currently €7.99 a bottle in my local Tesco. In Tesco Northern Ireland it retails at £5.49, around €6.30. At the Normandie Wine Warehouse in France, the price is €4.95.

The figures that follow will give you an idea of how the system works. Most importers are glad to get a net profit of 20 per cent, and 15 per cent would be more normal. Retailers would like to get 25-30 per cent, but in these straitened times, most make do with 20 per cent, including case discounts. If they are big enough to cut out the middleman and buy some or all of their wines directly, they can make a very nice 40-50 per cent margin, or offer very competitive prices. Most supermarkets and a number of independent retailers import part of their range, and source the remainder locally.

On a €10 bottle of wine, the Government takes €3.72, the retailer considerably less, around €2, the same as the poor winemaker, who must compete with every other producer around the world. Some costs are variable; if you buy a pallet of wine (50 cases) and have it delivered directly to your own warehouse you can cut out warehousing charges – but you will have to pay all of the duty on arrival in this country. Most importers keep wine in a bonded warehouse, only paying duty as they remove it for delivery. Wine is a heavy and relatively bulky product. Importing small quantities from Europe is more expensive (sometimes up to 70 cent a bottle) than buying a container from Australia or South America, which can work out as little as 17 cent.

As duty on wine is fixed, the more you pay for a bottle, the less goes straight to the exchequer, although the VAT does increase. Is there a sweet spot where value increases? As argued here before, you should notice a huge increase in quality once you pay €10-€15 for a bottle of wine. That doesn’t mean you won’t find bargains for less; competition is fierce and there are plenty of great wines at €8-€10 a bottle.

Cost of wine €2.00

Duty and excise €1.97

Shipping €0.40

Warehousing delivery €0.55

Importer margin (20%) €1.25

Wholesale price €6.25

Retailer margin (25%) €2.08

Retail price ex VAT €8.33

VAT (21%) €1.75

Final retail price €10.08

BOTTLES OF THE WEEK

Superquinn Classic Collection Australian Shiraz 2007, 14%, €8Classic is right; medium to full-throttle smooth, ripe, juicy dark fruits with a touch of spicy oak.

Château de Cascastel 2008, Fitou, 13.5%, €10.99 for the month of October (normally €12.99)I reckon Fitou produces some of the best value wines in the Languedoc, and this must be one of the best. Delicious forward ripe blueberry and dark cherry fruits, concentrated and very long, given the price. Great value. Stockists: O'Briens

Marqués de Vitoria Ecco Organic 2009 Rioja, 14%, €10.49Lovely, rich, ripe supple raspberry and cherry fruits and a rounded, easy finish. Great wine, great price. Stockists: Kiely's, Mount Merrion; Nolan's, Clontarf; Mill Wine Cellar, Maynooth; Harvest, Galway.

TNac by Falcora, Dão, Portugal 2007, 14%, €17.99T Nac stands for Touriga Nacional, Portugal's great grape variety. A lovely, refreshing wine packed full of meaty, dark fruits and a lightly tannic finish. Stockists: Fallon Byrne, Exchequer Street, Dublin; Marley Wines, Rathfarnham; La Touche, Greystones; Hole in the Wall, Dublin 7; Corkscrew, Chatham Street, Dublin; Gourmet Bank, Churchtown; Terrace Wines, Galway.

CIDER OF THE WEEK

Double L Cider, David Llewellyn, 6%, €5 for a 500ml bottleGrown and made in north Dublin, this delicious, refreshing cider is packed full of pure crunchy apple fruits, with a dry finish. Stockists: Dún Laoghaire and Temple Bar markets; Wines on the Green, Dawson Street, Dublin; drinkstore, Stoneybatter. jwilson@irishtimes.com