Where does the money go?
As you know (see previous blog on 'Our Wines') we choose our wines carefully in the £10 - £15 price range. That's a per-bottle, retail price. But why?
 
There's a lot of fixed costs in importing wine to the UK - and they don't change no matter what the cost/quality of the wine itself is. And there's a couple of percentage costs as well, all of which we'll describe in a moment. So when you buy a really cheap bottle of wine from the supermarket, there must be some 'give' where someone in the chain ends up getting less money. Is it the retailer? No. Is it the government? Don't have a laugh! No, of course, it's the poor old wine-maker.
 
And, inevitably, if you squeeze the wine-maker then, in an effort to still make their business a viable one, they will cut corners and quality in order to make the wine for that price. This is not the sort of wine we want to be drinking!
 
As an example, here's a typical bottle (75cl) of £4.99 wine and how the costs break down (the figures correct at time of publication).
 
 
 
The government takes 64% of the money!
 
Fixed costs here are:
Excise Duty - the government takes £2.08
Logistics (shipping etc) - £0.20 - which is obviously very much an approximation
Packaging - £0.40
 
And the percentage costs:
VAT - yes the government again, taking 20%
UK importers take approximately 10%
Retailer (that's us), taking 10%  
 
What does the poor wine-maker get? Only 6% or about 30p per bottle. 
 
Now compare that with our highest-priced wine at £15 per bottle. 
 
 
 
Hopefully you'll agree that the wine-maker is now where he/she belongs!
 
The fixed costs remain the same, so their effect on the percentage costs of the bottle are much reduced. This leaves the wine-maker with 42% per bottle which is a far more healthy £6.30 and allows them to potentially increase the quality 20-fold.
 
These are the wines we start with for sampling, and then only choose those for the club where we can taste that the money has gone into producing a truly top-quality wine.
 

Paul


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