The other day I was chatting to Mimi Avery, of the famous Bristol wine importing firm. She said that she couldn’t understand how some supermarkets can offer bottles of wine at, say ‘£4.95 reduced from £9.95’. If the normal selling price was a tenner, how could they make a profit on a fiver?
Then by chance she found herself sitting on a plane next to a buyer from one of our biggest supermarket chains. She asked him. He replied with a chuckle that it was easy. The actual cost to the supermarket of the wine in the bottle would be around 87p. Everything else was extra: shipping, bottling, distribution, advertising, duty, VAT, and of course the mark-up. In other words, the wine was not remotely worth £9.95 in the first place; that was a way of clearing the way for a ‘half-price’ offer.
Since duty is £2 a bottle for still wine, whether it’s mass-produced rotgut or Château Lafite, and the other costs, apart from VAT, are more or less constant, the more you spend on a bottle the better value it is.
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