Will Lyons Uncorked

How much wine tax are you paying?

A survey conducted on behalf of the British Beer & Pub Association crossed my desk this week. It concluded that more than half of its respondents would actively vote against Labour if it pushed ahead with its planned above-inflation duty increases on alcohol.

I always guessed that most of us really buy wine based on its cost. We're either in a £3.99 mood, prepared to pay between £5 and £7 or for the really special occasion we splash out on a bottle upwards of £15. But these findings suggest that price is a far more emotive issue among the electorate than I imagined and that many have seen through the anti-binge drinking arguments and see increases as just another stealth tax. This, of course, has potentially enormous ramifications for the SNP, which is busily pushing through an anti-binge drinking agenda.

But it does raise an interesting question, namely what is the true value of a bottle of wine? When we are walking down the supermarket aisle how much are we actually spending on the wine itself? I have done a few back of the envelope calculations and come up with some rough figures that may surprise.

When it comes to the actual containers, most of the costs are fixed. These include corks, labels, carton and the bottle and roughly equates to around 32p. Bottling is a further 8p and distribution 26p. The Government takes a whopping 44% of the cost of wine in tax and duty, with the rest going on the retailer's Margin, which normally equates to around 30%. At £3.99 you are paying 63p in VAT and £1.85 in duty. So an astonishing £2.48 is paid in tax.

To illustrate the point, if one buys a case of wine with an average price of £3.99 the total cost will be £47.88 but £30 of that is tax. The actual cost of the wine is approximately 63p give or take a few pence either side. What's interesting is the difference between the wine content when one trades up. For example, a £5.99 bottle of wine equates to £1.84 being spent on the actual wine itself, whereas for a £7.99 bottle of wine £3.05 is spent on the wine – with £2.45 on tax.

Whisky duty

Of course all this pales into insignificance in the case of Scotch whisky. Tax on a bottle of whisky is currently £5.48. But that's only excise duty. For every bottle sold, VAT, presently at 17.5%, is also added, bringing an astonishing tax take of £9.67 for every bottle of whisky. This will rise by 2013 so the duty will hit £7.28. Makes you think twice, doesn't it?

Good deals of the week

Thank goodness the supermarkets are discounting, I hear you say. This week there are some cracking offers out there. Somerfield is reducing the Brown Brothers Tarrango 2006, a crunchy, light Beaujolais-style red, from £5.99 down to £3.99. Stick it in the fridge for an hour and serve it chilled. Waitrose is reducing a fabulous Chilean pinot noir, Cono Sur Pinot Noir 2006, by 20% from £6.99 to £5.59.

But for Champagne lovers out there my deal of the week is Majestic's reduction on one of the noblest houses, Bollinger Special Cuvée Champagne. Usually £44.99, it is now down 33.3% when you buy two to £29.99. Majestic.

Macallan launches duty-free special

News just in: Macallan is launching yet another range. Estate Oak, priced at £34.99, will hit the shelves of duty-free outlets this morning. According to the blurb, for each and every bottle purchased of this limited edition, The Macallan will plant an oak tree on The Macallan Estate in Speyside, Scotland. To support this and to minimise waste, it comes without a carton. Sorry, this is so hot off the press I have not been able to try a bottle. But given the amount of tax you will save it may be worth grabbing one on your way back from hols.