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Dublin, Ireland
Hi, I'm a Master of Wine (MW) having passed in 1997. I opened a wine shop in Dún Laoghaire, Ireland, called The Wine Library and this is my personal wine blog. There should be no conflict of interest between my work with The Wine Library and the opinions expressed herein but I will do my utmost to be fair and responsible in my posts – please read my Who Pays article in re the ethics of wine trips and writing. I have worked in wine education, retail, and consultancy since 1990. From June 2013 until May 2017 I was the Retail Manager for The Wicklow Wine Company. I was a member of the Council of the Institute of Masters of Wine (IMW) from 2008 to 2014 and was also a member of the Events, Trips, and Governance Committees. Having had problems with potentially libellous comments from unidentifiable posters, I now require that if you post a comment, you must identify yourself properly or it won't be published. Please note that I do not review products or services on request so kindly don't ask. I value my independence and I believe my readers (few that they may be) do so also.

Thursday, November 16, 2017

Yet more on minimum pricing

Recently a colleague posted a piece on Facebook about how annoyed they were that Lidl was selling a Muscadet for €3.99, down (allegedly) from €7.99, and wondered about the "plonk inside the bottle". However, I noticed at once that this is a wine imported into Ireland by The Wicklow Wine Company and was able to assure her that it is a good wine. But WWC sells the wine for €14.70 so how is it a) selling for €3.99 and b) was it ever €7.99 to begin with?
Well, it certainly can't sell at a profit for €3.99 because excise duty is €3.19 per bottle, which comes to €3.92 with VAT. So, the only way it can be sold profitably is if the cost of the wine, shipping, warehousing and distribution comes to less than €0.07 per bottle. I know that the wine in question costs over €2.50 ex-cellars so the landed, duty-paid ex-VAT cost of the wines is no less than €5.69 assuming no cost for shipping etc.
In re the second question I've never seen that wine on sale in Lidl for €7.99 which it has to have done at least three months before it was reduced to a sale price - how do they get away with this? You'll have to ask Lidl. Somewhere in their head office is a bottle of this wine with a sales receipt for €7.99 attached suggesting it was once on sale at that price but I defy Lidl to show photographs from all their stores showing this wine ever on sale in the last three months at that price.
I had a conversation with a major buyer on the plane to ProWein earlier this year. In that conversation I was informed that this buyer had been told by a buyer from one of the discounters that on ONE wine alone they lost €9 million in a year by selling it below cost. Yes, €9 million. Think how that much money could help with many of the social issues in this country.
I mention all of this because the UK Supreme Court recently approved the introduction of minimum unit pricing of alcohol in Scotland. There is a substantial body of evidence demonstrating that minimum unit pricing (MUP) is very effective in reducing harmful drinking but, from the point of view of a small retailer, the other great effect of MUP is preventing abuses such as below-cost selling of beer, although it is much harder to prevent below-cost selling of wine. For example, the quoted Muscadet has 12% ABV so at €0.50 per unit that would have a minimum price of €4.50, still below cost.  Given that all small retailers have to make a margin on all sales the fact that a major chain can sell below-cost LEGALLY (thanks to the now defunct PDs) is a major difficulty in offering a really interesting range of wines and services to the Irish public. Business is tricky enough as it is without having to face this sort of bullying in the marketplace.


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