UK Budget Increases
Another budget, another increase on duty across the board. Every year duty on wines and spirits is increased in line with inflation and this feeds through into retail prices. However many people are unaware how much duty is actually paid on most wines, and the effect this has on pricing and what is potentially earned by the producer and the distribution channel.
The duty on a standard bottle of wine is now over £2.16 per bottle. The other tax directly on wine is VAT which stands at 20% on cost or one sixth of the total price. VAT applies on duty so increase duty and VAT goes up as well.
When you look at the price of some wines sold through discount supermarkets and you take in to account the tax elements described above there is very little left for the producer, importer, retailer or haulier which questions the quality of the wine on offer or the sense of a retail outlet in potentially selling wine below cost.
The alcohol duty is per bottle of standard wine therefore interestingly a £100 bottle of wines bears the same amount of duty as a £6.99 bottle. VAT is of course dependent on price.
There is an argument that the duties simply pay for the health costs associated with drinking wines and spirits. Interestingly I have seen another argument that red wine has substantial health benefits. That will be the subject of another blog.