Diary of a Shopkeeper, 16th July

The cast of the BBC’s Line of Duty celebrate yet another bad blogpun in their honour.

August 1st will be a red-letter day for anyone who buys, sells or drinks wine. And by red I mean red like on your bank statement when you slip into overdraft. Red as in red flag. Red as in STOP! Stop drinking wine? I hope not. But certainly stop as in stop and consider your purchasing choices. In the spring budget this year the chancellor announced that duty would increase on all alcohol from start of August. The wine trade started doing its sums. And worrying.

First, what is duty? It’s the tax payable to HMRC on various goods deemed to be a good source of government income. (I’m talking about the UK government; the Scottish government has no powers in this area.) And it’s a very good source. About £13 billion will be raised through alcohol duty this year. That’s roughly ten times as much as comparable countries like Sweden and Germany. Major wine producers like France, Spain and Italy raise virtually no tax like this – which is one reason wine is a lot cheaper when you’re on holiday there.

When I started out, duty was £1.12 per bottle. It’s currently £2.23 – twice as much. In fact, it’s actually worse than that. There’s VAT to pay on the duty – yes, a tax on tax! In 2000, VAT was 17.5%, meaning that the total duty-plus-VAT bill was £1.32. Now VAT is 20%, so that total comes out at £2.68.

But from 1st August it’s going to get significantly more expensive to buy a bottle of wine. Duty is increasing for almost all wines by 44p per bottle, taking it up to £2.67. Add VAT and you get £3.20. And that 44p is how much more shopkeepers and restaurants are going to have to pay: an increased cost which will be somewhere approaching a pound by the time it is passed on to retail customers.

The government used a couple pieces of good news to distract from the bad. The first was that sparkling wine like Champagne, Prosecco and – good politics, this – English fizz – will have its duty reduced to the same as still wine. For years there’s been a premium on sparklers, but that is going, saving 11p per bottle.

Second, tax is good for your health! The government tried to present their tax hike as being health driven. Only high alcohol wines would have their duty levels increase; low alcohol wine would see a reduction, encouraging us to consume fewer units overall. No doubt that’s a good thing, but the problem is where the line separating high and low was drawn: 11.5%. Out of approximately 500 wines on our shelves, only about a dozen have alcohol levels lower than that. Some sweet German Rieslings, frizzante Moscatos from northern Italy, zero-alcohol choices for drivers. Eh…that’s about it. It’s not that we avoid lower alcohol wines, it’s just that so few exist. And with global warming leading to riper grapes, higher sugar levels and more alcohol, the trend has been upwards for decades.

So what’s to be done? We’ll be looking around for lower alcohol wines. But we’ll only stock them if they taste good and feel good on the palate. Importers will be searching cool climate areas with the potential to produce decent sub-11.5% wines. Some of these can produce enjoyable, if not hugely complex, wines: Beaujolais, Vinho Verde, the hills of Veneto. Winemakers will be considering harvesting earlier, before grapes produce too much sugar – but that’s risky, as it could result in unwelcome “green” flavours. At what the trade calls “entry level” – most house wines and supermarket bottles under a tenner – we’ll see more examples of alcohol being removed by mechanical means. As these involve heating the wine to effectively distil alcohol out of it, it’s not an approach that quality-winemakers favour. We won’t be rushing to stock many of those.

To summarise, most wines will continue to be above 11.5% in alcohol, and so will attract the higher new duty. The claim that customers will have a realistic choice of cheaper, lower-alcohol wines or more expensive higher-alcohol ones, is window dressing.

So for the next week we’ll continue what we’ve been doing all month: stocking up in July as much as space and bank balance allow. That won’t keep prices low forever, but it will at least spread the pain over weeks or months, rather than all of it hitting our shelves – and our customers – on 1st August.

This diary appeared in The Orcadian on 19th July 2023. A new one appears weekly. I post them in this blog a few days after each newspaper appearance, with added illustrations., and occasional small corrections or additions.