by Andy Neather

Wine’s Next Price Shock

Call it the shock of the mediocre. Earlier this month in a West Country pub, I scanned the wine list out of idle interest. It offered just two wines under £30; the rest – the likes of fruity Aussie Shiraz and blah Rioja – were priced around the £38-£42 mark. Then last week I was perusing Tesco’s list for a friend who wanted wedding recommendations. I knew it would offer slim pickings – but 19 Crimes Red at £9.50? Yellow Tail Jammy Red Roo for £7.75?

Prime Minister Rishi Sunak is declaring victory over inflation; British wine drinkers haven’t noticed. ONS data for January 2024 showed that the average bottle of red now costs £7.85 – up 8% on last year. Alcohol inflation is currently more than double the headline rate. Worse, the Government is determined to make things worse with changes to alcohol duty from February next year. It adds up to a substantial challenge to both the drinks industry and wine drinkers.

Wine price rises have been racing ahead of inflation for some while. If that’s clear in supermarket prices, it’s even more marked in restaurants battered by rising energy and food prices.

Looking back at wine list pictures on my phone, I see that a Valpolicella I drank at a mid-priced Italian restaurant in London’s West End in January 2022 is today selling there for £53, an increase almost three times the cumulative rate of inflation in the intervening period. At my local Georgian restaurant, I drank a Saperavi in June 2021 for £34; it’s now £45, a hike almost twice inflation. Meanwhile the Asprolithi Greek white I enjoyed at a Peckham eatery in January 2020 at £24.50 is now up by almost 50%, to £36 – more than double headline inflation.

A bigger shock is coming. Alcohol duty remained unchanged in this month’s Budget, but last March the Chancellor hiked duty on a bottle with 12.5% alcohol by 20%, or 44p, starting last August. It was the largest single increase in alcohol taxes in nearly 50 years.

Worse, part of that increase was a new duty regime of baroque complexity, charging according to alcohol in increments of 2p per 0.1% ABV. For the moment, all wine is charged as though it were 12.5%, ie £2.67/bottle, via an “easement” granted until 1 February 2025. Then, the new regime will come into full force, meaning a possible 105 different rates per bottle. For wine of 11.5 to 14.5% ABV, duty will range from £2.45 to £3.10/bottle. Different vintages of the same wine, on the same shelf, will thus cost more if one is stronger. Prices are predicted to rise for three quarters of red wines. And it will be a nightmare for independent merchants to administer.

If this sounds like the kind of mad idea dreamt up by a Coca-Cola-obsessed teetotaller who knows nothing about wine, it is. Step forward Rishi Sunak, who devised the reforms as Chancellor in 2021.

The Treasury claims the reforms will help “small craft spirit and wine producers innovate lower-strength products”. That is pure fantasy as far as most smaller wine producers are concerned. Elsewhere there may be some effect. Richard Siddle, editor of industry publication The Buyer, reports that at ProWein this month there was marked interest in branded mid-tier wine ranges at 8-11% alcohol. “I think we are going to see a whole raft of 9-11% wines on supermarket shelves in the coming months,” he says. “But do wine drinkers really want them?”

Most drinks industry reaction has been harsher. In an unusually strongly worded intervention last week, Wine Society Chief Executive Steve Finlan said that the duty plan was “ludicrous, expensive and probably unworkable.” Put this next to the increased costs of post-Brexit wine importing, and Brexiteer prattle about consumer benefits (eg Evening Standard, 8/9/16: “Brexit ‘will bring flood of cheap Aussie wine to the UK’”) looks even sillier.

I worry too about the longer-term effect on the wine culture that has blossomed in the UK over past decades.

We have in fact seen long-term inflation in UK wine prices. A while back, a tweeted price list from defunct off-licence Augustus Barnett, circa 1974, offered a window into a disappeared world of “Algerian Burgundy”, Yugoslav Riesling – and reasonably priced French classics. Then, you got a bottle of a reliable, unshowy Médoc like Château La Tour de By 1967 for £1.45, the equivalent with inflation of about £13 today – except a youngish La Tour de By nowadays is actually around £25.

If you were feeling flush, you could have bought Château Palmer 1960 for £5.03, about £45 today with inflation. Except that a similar-age bottle of Palmer, albeit better made and freed from dreadful vintages like 1960, would now set you back around £130.

Yet the list’s whiskies, gins and brandies were all more expensive than today, after inflation. Successive governments have denied the wine business the sort of duty cuts enjoyed occasionally by spirits and beer, perhaps because of an unwillingness to be seen favouring a “middle-class” drink like wine.

The UK wine market has surged since the 1970s, thanks to changes in tastes and to the middle classes winning from the wealth redistribution set in train by Margaret Thatcher. But there may be limits to that growth.

There is some evidence that drinkers may be becoming more sensitive to price changes. As the Wine and Spirit Trade Association points out, tax receipts on wines and spirits plunged by £436 million in September 2023-January 2024, on the previous year, after the last duty hike.

Meanwhile we have seen recent wine industry angst over the shrinking market for wine among young people. As Simon Woolf showed recently , most of the hit to sales is being taken by branded wines. Expect that to get worse next February.

The UK wine trade is the kind of successful, globally oriented industry that the Government hails as the key to post-Brexit prosperity. Now ministers are kicking it – again. In the end, we wine drinkers will pay the price.

Andrew Neather blogs on wine and food at; photo by Diana Polekhina on Unsplash 

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