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Squeeze on Wine prices for 2008

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As we finally get 2008 on the move after the sluggish January that always seems to follow Christmas, there appears to be a squeeze on the horizon for wine prices from our beloved leader “Mr G Broon”.

My forecast from 2006 was that when the government have finished penalizing the smokers, they would start on the drinkers. I have often wondered over the past couple of years whether there is an ulterior motive in the supermarkets attitude to pricing of alcohol. My theory is that as they get people out of the habit of drinking out in pubs and restaurants, by offering ludicrously cheap cases of beer and wine, mostly below the cost at which they are buying them, they lull them into a false sense of security and then wham, the prices go right back up after the habits have been formed of drinking at home.

Some may say this is an admirable attempt by the big 4 to reduce drinking and driving. No-body would argue with that benefit and any initiative to reduce deaths on our road by drinking and driving should be applauded, but I am suspicious of this being the real reason behind the campaign. The government have also tried to support the drinks industry via their claims that Malt Whisky duty should not be increased and in fairness the duty has not been increased dramatically over the last few years. Wine duty currently sits at £1.36 per bottle of still wine plus vat.

What will happen in 2008 is as follows:

* The government will increase duty on still wine by 25 to 30p per bottle making the duty costs around £2.00 per bottle including vat.
* The government will increase duty on Malt Whisky and other spirits by maybe 3%
* They will probably increase the duty on beer by around 5p per pint.
* There will be some hot air about how this will stop binge drinking and under age drinking.
* The Euro will continue to strengthen against the pound making European wines relatively more expensive, by as much as 10%

If we are to target binge drinking we need to tackle the Alco pops industry, a product that we have refused in 30 years to stock despite it being a massive sector of the market. We also need to target high strength large format ciders and cheap vodka. By holding the price of spirit duty we have actually encouraged the proliferation of cheap vodkas and other spirits.

The reality is that the majority of malt whisky sales are actually for export and therefore are not valid for duty payments, so we can in no way say that this policy has worked. We still allow supermarkets to sell promotionally with alcohol, eg 3 cases of beer for £20, when the real cost should be almost double that and we still allow off licenses to sell 2 liters of cider in plastic bottles (pet) directly targeting the youth and alcohol abusers market.

By increasing the duty on wine we are targeting centrally the middle market, the casual wine drinker, the side of the market where people have been proven to be the most informed about the choices they are making on their alcohol consumption.

Is this the nanny state in overdrive or are we simply a sitting duck target for the coffers of the treasury. None of us will know the answer for sure. It could be that by increasing the price of duty, the UK will have many less alcohol related diseases. It could also be that the informed drinkers who make their choices are just being targeted as a money bank.

If we could target the needy areas such as underage drinking, leading to lack of teenage control and violence, I would be 100% for it. Unfortunately I cannot believe that the policy of driving wine duty prices upwards, the strength of the Euro against the pound and the determination of central government to keep the tills ringing with tax, will improve the UK’s health in the slightest. We will see price rises of 15 to 18% on most European wines and around 9 to 12% on non European wines this year.

Perhaps this is the year for stocking you wine cellar properly, but do it early, preferably before the end of March because the Chancellor is going to hit you this year and he is going to hit you hard, right where it hurts!

Andrew Coghlan

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