To get the most ‘wine bang’ for your wine buck, it’s worth looking at the amount that the actual producer of the wine gets. This usually is a much better indicator of the true or intrinsic value of the wine rather that the retail price which includes taxes, transport etc.
Ireland’s tax regime is such that whatever pleasure is available for purchase, the consumer is going to end up paying a sizeable chunk over to the Revenue Commissioners. With wine, we have to be particularly careful because with the cost of transport, profit margins taken by the wholesaler and retailer along with the high Irish customs duty and value added tax, the actual cost of the wine from the producer is a relatively small amount of the retail price.
Let me give you an example to illustrate the point:
Wine One: Standard bottle* retailing at 9.99 euros.
Here is a breakdown of that price:
Value Added Tax (21.5%) 1.77
Customs Duty 2.47
Profit margin (wholesaler) 1.15
Profit margin (Retailer) 2.47
Transport 0.30
Total costs 8.16
Subtract this from the retail price and you can see that the total cost of the actual wine (i.e. paid to the producer) is only 1.83 Euros.
Wine Two: Standard bottle* retailing at 19.99 euros.
Here is the breakdown of that price:
Value added Tax (21.5%) 3.54
Customs duty 2.47
Profit margin (wholesaler) 2.30
Profit margin (retailer) 4.94
Transport 0.30
Total costs 13.55
(*standard bottle of non-sparkling/fortified wine as these styles attract a much higher tax than amount shown)
From this you can see that the price paid to the wine producer is 6.44 (19.99 minus 13.55) euros.
If you compare the two wine costs (that is, the price paid to the producer), the more expensive wine gives much better value than if 2 bottles of the cheaper wine were purchased. In fact, if you buy the wine for 19.99 you get 3.5 times the ‘wine value’ of a 9.99 bottle. So what are you waiting for?
