All I hear and read is that wine consumption in the UK is in big decline and has been for some time. Someone recently told me red wine sales specifically were down 50% in certain parts of hospitality since Covid. Yikes! Surely that cannot be right?
I accept wine has increased in price for all of us either via our respective wine merchants or simply while shopping for wine from a supermarket or Majestic. Tax doesn’t help of course.
Recently, I was in a Mallorca supermarket and found a bottle of wine (from mainland Spain) that I recognised as being supplied to us here in the UK. The wine was €2 a bottle… yes, €2! Having dusted myself down from the fall I took when I saw the price, I calculated this was roughly £1.65. So what happens to the £1.65 when it arrives in the UK? Shipping adds typically around 20p to 30p per bottle. As it happens, this red wine is 13.5% ABV so gets a higher excise duty of… wait for it… £3.10! Then add 20% VAT and the same wine is suddenly £6.06 then, of course, the wine merchant or supermarket has to make their share.
Ouch! I am now residing in Spain as I write this! (No such luck!)
Clearly, duty on popular 14.5% ABV wines (such as Argentinian Malbec) has jumped by approximately 49% in the past five years. Meanwhile, standard 12.5% ABV wines saw a duty increase of roughly 30% in the same time scale.
We know the cost price of wine is always going up for all of us but how are businesses reacting to increasing wine cost prices and how are they charging the customer for it?
Ripping customers off
Recently, I have been lucky enough to be out in other people’s establishments enjoying a rather posh country house hotel and its newly opened pub, another two pubs in London and four restaurants that I would describe as independent ‘up and coming’ casual-dining affairs – two in Manchester and two in London.
All these establishments have something in common. They are completely ripping their customers off for a glass of wine. I’m sorry but I have to say this. Irrespective of duty, suddenly there is a complete obsession with the 125ml glass of wine measure. I accept this measure is a legal requirement but very few people on earth want to order a 125ml because it is too small despite 125ml glasses making up 10% of our ‘wine by the glass’ sales. Believe me I am NOT an advocate of the 250ml glass either. A third of a bottle in a glass as a measure is just not right and we don’t offer this but a 175ml seems a sensible measure for all to enjoy a ‘proper’ glass of wine.
So, to the ‘125ml Club’ that is fast developing… you are screwing over your customers and they will not come back as a consequence or, if they do come back, they won’t drink your wines with quite the same gusto. The wines on the lists were far from premium either. One restaurant charged me £12 for a 125ml of Vinho Verde. The wine probably cost them £6 for a bottle and if it didn’t, it needs to question its supplier. I asked if they did a 175ml measure and the answer was a very positive “yes, but, we will charge you pro-rata”. So my desired measure of wine cost me £16.80! For a glass of Vinho Verde! That’s before they, of course, added the service charge of 15% so £19.32 for a 175ml glass of Vinho Verde! Are you kidding?!
Another wanted to charge me £14 for a 125ml glass of Wild Idol. If you haven’t heard of Wild Idol, it is a non-alcoholic sparkling wine. A good one but not £14 a glass worth.
I know, like everyone else, that duty charges have gone up as noted above but it doesn’t mean one goes off at a complete tangent and reduces ones measure of wine by the glass, then super charge it and hope the customer won’t notice.
Now, before everyone says ‘employer’s national insurance contributions, business rates, rent, etc. we can’t afford to pay unless we charge the guest more’ then maybe you’ll survive if you stop thinking about ‘banking percentages’ as the way forward and actually go for cash. ‘Cash is king’ apparently! After all, you want your turnover to go up with repeat custom.
Massive price shift on entry wines
I read recently in The Times ‘Restaurant wine prices have rocketed 40% in the past five years’. I have to agree with their findings. Besides wines by the glass, there has been a massive price shift on ‘entry point’ wines by the bottle. These are the first few wines on any list. Not one of the aforementioned establishments offered a red wine for under £40, in fact the entry point for a bottle of red averaged £43 and believe it or not, white wines by the bottle started at over £30 with the average sitting at £32 for the least expensive white wine.
Before you all shout ‘they must have been amazing places with wonderful wines’, the answer is, yes, one or two were ‘premium’ places but the wines were not and the rest were not so premium, and their wines equally didn’t ‘knock my socks off’.
My questions is ‘are these places being completely ripped off by their wine merchants in the first instance?’ Therefore, they may feel the need to pass this all on, along with the duty while adding a tidy amount for themselves to keep the same percentage margin alive? This pricing and glass measurement strategy will not yield long-term growth. It will, however, yield a short-term sales gain and then suddenly you will all become a ‘special occasion’ sort of place. No one pops in for a drink anymore and suddenly, the abyss. Wine is in decline because of the prices we are being charged, as everyone, including supermarkets, try to maintain their percentage margin rather than going for volume.
I am happy to say that by celebrating differing grapes and some of the ‘usual suspects’ we have, on average, eight reds and whites between £22 and £30 a bottle and none of our pouring wine is more than £7.95 for a 175ml glass. This keeps us very popular indeed because we offer high-quality wines for a very fair price. Our wine sales went through the £1.6m mark last year and wine volumes were up 9% like-for-like in a very established, high-quality village and rural pub business. Red wine alone was up 6.2% like-for-like in a ‘warm summer’ year.
Real value for money is the order of the day now, surrounded by good service that shouldn’t be rewarded as a given.
If wine sales are on the slide, in my opinion, it is driven by too many people thinking they can hike the prices to outrageous levels, reduce measures and still expect customers to be there supporting them. It is time to wake up and smell the bouquet.
