The good, the bad and the ugly: wine prices

Posted on 22 March, 2017 by Dimitri Safonov | 0 comments

the good, the bad and the ugly - wine prices

Quite a few years ago I've had quite mixed feelings about prices for a bottle of wine. At one hand, I thought that more expensive wines should most definitely taste superior. Yet being enslaved to the corporate world at that time, I did not want to splash out on a very expensive bottle every week. You know, saving for a deposit and all that jazz.

There is also quite a difference between supermarket prices and independent wine shops - the latter seemed to have a more exciting but also much more premium stuff, whereas I could simply pick up that bottle of uncomplicated everyday red for £7-£9 in a supermarket, no fuss.

That was my story back then. I obviously did not know any insider facts about wine industry and why some things are as they are. Right now, after setting up Organic Wine Club and trading for almost a year, I must admit I got my eyes peeled at what is going on and can understand much more about the correlation between wine’s price and its quality. Can I bore you with this for a minute of two?

How wine prices are calculated?

First of all, let’s get to grips about how much the actual wine producer receives for the wine that is sold in the UK.

Let’s consider two examples: a bottle that costs £5 retail and another at £9.

To start with, let’s deduct UK Duty, it is something that beyond anyone’s control, it has been just recently increased to £2.16. So if you see a bottle, deduct that from its price tag straightaway. You have just made the Treasury a bit richer.

Next stop is retailer margin, followed by distributor margin (everyone needs to feed their families and so on, you understand). On the first wine this could be just under £2 and second bottle at £3.5.

We then need to ship the wine, which costs just under £1 per bottle in average.

As you can see, in the first instance, the winemaker simply left with nothing. They obviously need to feed their families, also spend money on equipment, labour, actual glass bottles, labels, packaging and so on. In reality, they do not see more than £0.5 per bottle of wine that is sold for a fiver in the UK.

Why nobody told me this a few years back?

One more comment on the labour - as you can imagine, the more precise,  delicate and manual approach to winemaking increases the quality of the wine but also increases the costs, so there is a correlation between quality and price. This is where organic wine can cost just slightly more as the volumes are lower and it requires more careful approach to winemaking. On top of that the above mentioned £0.5 price was worth a bit more a year ago when the pound was strong. Currently all UK distributors have already increased the prices by 10-15% at least. It doesn’t help.

Let’s go back to our second bottle, £9 one. In this case the winemaker can get somewhere from £2.5 to max £3 per bottle. It seems just a bit reasonable, doesn’t it?

Wine 'Sweet Spot'

It is no surprise at all that many independent wine stores that sell, way we call, good stuff are trading within, so called, sweet spot of £12-£14 per bottle. It means you are really getting the most for your money.

Obviously with the wine clubs it is slightly different. If you are, as a Member, committed to buying regularly, they can predict the demand, buy in bigger quantities and save some money for themselves and hopefully pass these savings onto you. You are to get a bit cheaper wine with no compromise on quality.

What's inside that £0.5 bottle?

It is rather hard truth, but please put yourself in the winemaker shoes - if you are to ship the wine to a big supermarket chai and get less than £0.5 per bottle, what exactly are you going to pour inside? A homogenised and highly preserved product that has almost nothing of those fancy antioxidants and nutrients we want from wine. It has the same amount of alcohol and an enormous dose of sulphites in it to preserve and mask the flaws and off-smells.

What's the way forward with the wine clubs?

Apologies for a very stark comparison, but obviously there is a way forward. You can start with wine club budget range, have a sense of their wine buyer palate, how do you like the wines and their food suggestions and either stay or check out the other club. It is exciting and, whilst I obviously advocate drinking organic, you have plenty of choice!

Most obviously if you can afford to buy wine at a bit higher price to guarantee better quality and nutritional value, you are a lucky one. Many people in winemaking countries like Georgia (a birthplace of wine) enjoy much better wine pricing. Visit many of the Georgian natural wine bars like g.Vino, Vino Underground, DADI or Living Vino wine bar to fully enjoy natural wines from its birthplace. 

Drink good wine for even better you

Posted in lifestyle tit-bits



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