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The Real Cost Of Your Italian Wine

Buying Italian wine and ending up with a bottle you’ll enjoy can always be a bit of a gamble even for those who make it their business, like us, as it’s not always possible to try before you buy so the final choice is often dictated by price.

The subject of wine prices can be a delicate one and has the ability to make consumers feel patronised on their level of wine knowledge or pressured to buy more expensive bottles for the benefit of the retailer. Being both retailers and consumers we are acutely aware of this. So, to help you with your wine buying journey, we’re going to take you through some of the tangible elements that make up the cost of the wine you drink so you’re better equipped to make an informed decision next time you’re in the wine aisle.

Italian wine, like wine from any other part of the world, attracts excise duty and VAT. On a 750ml bottle of still wine with an ABV between 5.5% and 15% excise duty is £2.23 (even more for sparkling wine at £2.86). On top of this, there’s VAT of 20% included within the price of the wine. So on an averaged priced bottle at £5.68 that’s a total of £3.18 in taxes.

What about packaging and transport? Unless you’re eyeing up a big brand wine with a fancy bottle these costs are relatively small especially for supermarket wines that are produced and shipped in huge quantities - around 60p per bottle. The cost of transport can increase dramatically particularly when looking at wines from independent wine merchants because they don't have the buying power or import the same vast quantities of wine as the supermarkets. But to illustrate we’ll keep things simple and stick with 60p.

Those of you paying close attention up to this point will have realised that two-thirds of what we’ve paid for the wine (£5.68) has only covered taxes and logistics and we’ve not yet considered the retailer's margin and ultimately the cost of the wine in the bottle, which we’ll look at below.

There are many factors that affect the cost of wine but the two biggest influencers are the weather and farming methods.

Bad weather conditions make for lower yields of grapes, which usually pushes up the price (a good wine will differ slightly from year to year because of the differing weather conditions).

The farming, harvest and vinification processes for wine produced in large quantities is heavily mechanised resulting in lower labour costs. Wine from small vineyards is often attended by hand throughout the whole process so the care and attention that goes into producing the final bottle of wine are greatly increased and as a result, so is the quality and cost.

The final piece of the puzzle is the retailer's margin. To keep things simple we’ve used an average of 26% as the margin but this could be much higher especially in restaurants. This means that for our £5.68 bottle the retailer keeps £1.48 to cover their overheads and other costs. So what are we left with? Just 42p of wine! It takes approximately 1kg of grapes to make a bottle of wine...where can I buy a kilogram of grapes for 42p?

If you’re looking for more wine for your pounds you only need to spend a little extra for a dramatic increase in the quality of the wine. Between £10 and £25 tends to be the sweet spot. Pay more than this and you may end up paying for branding (unless of course, you’re eyeing up a 10 year aged Barolo!). Or if you’re happy with your £5.68 bottle, keep on drinking it. Wine, after all, is subjective and we’re unquestionably not here to tell you what you like.

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