#Nationaldrinkwineday: Enjoy a Glass of Wine while You Can Still Afford It!

Slightly off-topic today, but given the current focus on tariffs, taxes, and their impact on consumer habits and the logistics industry, we found this to be an interesting subject to explore—especially since it affects one of the UK’s favorite alcoholic beverages.

Although the United Kingdom's wine production is still in its infancy  compared to some of its neighboring countries, the UK plays a significant role in the global wine industry. Despite being only the 56th largest wine producer worldwide, the UK ranks 5th in wine consumption and is the 3rd largest wine importer, accounting for 11.8% of global wine imports.

The majority of wine imports to the UK come from the European Union, with France and Italy as the leading suppliers. While the UK's wine import volume has declined for three consecutive years, wine expenditure has remained steady since 2016. This suggests that UK consumers are prioritising quality over quantity. But how long will this trend continue?

In January 2024, the average price of a bottle of red wine in the UK was £7.85, which is an 8% increase from the previous year (unless you are looking at the in the Government Hospitality Wine Cellar where the average price of a bottle purchase in 2023/2024 was £24.66). As a comparison the average bottle of wine in France is 3,9 euros.

The price of wine is affected by alcohol duty, VAT, packaging, marketing, and logistics (you will see below the marginal effect of the last 3 on your average bottle of wine price below).

1st February 2025, the UK government introduced a change in the alcohol duty rules that will charge duty based on the alcohol content of the wine (replacing the temporary fixed rate introduced in August 2023).

How do UK duty rates on wine compare with the EU?

To put it simply, this is what the cost of a £9 bottle of 13.5% abv wine looks like now:

Source: https://gavinquinney.com/2024/11/30/your-guide-to-uk-tax-on-wine/ 

What does this mean for the consumer?

Higher prices are inevitable. In the ongoing battle among supermarkets to keep prices low, any reducible costs will be squeezed. However, I suspect that the burden will primarily fall on producers, transporters and distributors, while retailers margins remain intact—unless you're a small reseller without the purchasing power to negotiate bulk deals.

If keeping the price of a bottle down becomes a priority, some winemakers might resort to adjusting the alcohol content of their products—potentially at the expense of quality. Certain exporting countries might find it easier to implement these strategies due to more flexible regulations or lower production costs, giving them a competitive advantage in the UK market. For example, countries with fewer restrictions on winemaking practices might be able to modify their processes to meet price demands more easily than European producers, who typically adhere to stricter regulations. Furthermore, UK labelling laws do not require detailed disclosure of alcohol manipulation methods, leaving consumers largely unaware of how their wine has been modified. If the manipulation of wine alcohol content to meet consumer expectations for low-priced bottles were to materialise, it could significantly alter the UK’s wine import landscape and its logistics.

And if this was not enough The Extended Producer Responsibility scheme will come into effect in April 2025 making producers pay for the waste from their packaging (in this case glass) a new tax which will of course have an effect on the average bottle of wine price.

To conclude:

So today on UK National Drink Wine Day #nationaldrinkwineday, enjoy (responsibly) a good glass of wine while you still can. Who knows how much and where your favourite wine tipple will come from in the next few years and at what price!