Today’s post broadens its usual standpoint to look something affecting the prices of the wine we buy – alcohol duty.
Rather than quote and paraphrase a dusty HMRC “Notice”, I have sought the views of someone at the sharp end of the business.
As friends of this site know, Dan Farrell-Wright runs an “Indy” wine merchant in Devon – Wickham Wines.
I often commend his wines – which, in some cases, he sources direct from France himself.
Having also operated outside the wine trade (with websites and in the services), Dan’s view is not a narrow one, and that makes it even more interesting.
He touches on other themes which resonate with MidWeek Wines and its followers.
These include inevitable price rises is “everyday” wines, drinking less but better and (something we return to another day) the alcohol v. heath debate.
Anyhow, that’s enough from me – let’s allow the man to speak for himself.
Dan’s view on alcohol duty
On 1st February 2025 duty on wine changed. What will this change mean when you next buy a bottle?
Historically a bottle of still wine was subject to a single duty band – and until August 2023 this was £2.23, no matter the alcoholic strength, nor the cost of the bottle.
The last government implemented the biggest rise in alcohol duty for 50 years when they increased that to £2.67… Oh how I envy the French, where duty is a mere €0.03.
From February the new government here is going even further.
The duty rate will rise again and will add an additional layer of complication – each half degree change in alcohol will now have its own duty band.
So what the effect be?
Thus, if you enjoy a full-bodied red from somewhere warm, say an Australian Shiraz or an Italian Primitivo, the duty will rise to £3.21.
On top of that comes VAT, new safety and security declarations, and a new packaging tax – the EPR.
Thanks to all these changes inflation on wine is running at more than double the headline rate.
And the results?
You may think this is justified to raise more taxes. If only! Treasury tax receipts show the previous increase reduced the overall tax take – which suggests people reduced their consumption.
Ah! so a reduction in consumption must be beneficial for the nation’s health?
Well, the harm vs benefits of moderate wine consumption are hotly debated and there is no scientific consensus.
No, the government’s stated aim is to help “small craft spirit and wine producers innovate lower-strength products”. This is what economists call nudge theory.
And there’s the problem, this is a policy dreamt up by economists with little understanding of how wine works.
Meanwhile back in the real world
Alcoholic strength is determined by the sun and, thus, in a hot summer grapes have more sugar (and therefore more potential alcohol) than in a cool one.
2022 was hot, in Bordeaux and produced one of the most critically acclaimed vintages of recent years with wines averaging 14% ABV.
2021, on the other hand, was cooler, more difficult, and less impressive, with an average ABV of 13%.
Of course, vignerons could have “innovated” lower alcohol wines in 2022 by picking under-ripe grapes, but the outcome would have reduced that acclaimed quality.
But does reduced alcohol make a difference?
Low and no alcohol wines have been around for a while – apparently in response to market demand.
Tasted blind a compromise is always obvious, they lack something: aroma, flavour, balance, and/or body.
No matter the great claims made by the winemaker, it’s always clear that the Emperor has no new clothes.
Wine has been more popular than grape juice for at least 8000 years for good reasons.
I suspect that the government hopes food scientists can correct the flaws in low alcohol wines with new production methods or additives.
In the same way they have created low fat, low salt, and low sugar foodstuffs but the prospect of Ultra Processed Wine isn’t one that excites me,
And the commercial implications?
All that said, major UK retailers are very price sensitive and – as with shrinkflation – lowering the ABV of wines will allow them to subtly reduce value whilst keeping prices keen.
In the short-term the reduction in quality may be barely perceptible but ultimately chipping away the quality of wine means the consumer will lose out.
Thankfully, Brian (and his dedicated clan of contributors) will continue to taste and critique wines to unearth the best value ones – kissing the (metaphoric) frogs so you don’t have to.
Finding gems for less than £10 is increasingly difficult and thus I suspect that the definition of a “mid-week wine” may need to rise ahead of inflation in 2025.
What about “Indys” like me?
As an independent wine merchant I will not compromise my own quality standards.
I will continue to source sustainable wines from artisan producers made with the minimum amount of intervention.
I trust that the quality will justify the price and if that means drinking fewer, but better, bottles, well, I’ll raise a glass to that.
Thank you, Dan., for a helpful, detailed and entertaining read.
Drop by again on Monday when the spotlight falls on Top Tips that still offer especially good value, but modestly priced, wines – despite, as Dan warns, the expected upward trend in prices
Photo for feature picture by Kelly Sikkema on Unsplash
