independent

Sunday 20 April 2014

Tipplers face new headache as wine price rise kicks in

CONSUMERS nursing festive hangovers face another headache in the coming weeks as wine prices rise.

Wine shops and supermarkets that delayed passing on a Budget duty hike until after the Christmas splurge are set to finally raise prices.

Finance Minister Michael Noonan's excise hike slapped an extra €1 in duty on each bottle of wine – with VAT on top of that bringing the increased government take to €1.23.

While most supermarkets and off-licences promised to delay passing on the higher tax rate to consumers until after Christmas, prices are set to rise as stores import fresh stocks at the higher tax rate in the coming weeks.

It all means the Government will be taking a massive €4.65 from a typical €7 bottle of wine – two-thirds of the price paid, said wine industry consultant Jean Smullen.

However, consumers living on squeezed incomes cannot afford to spend more on wine – meaning either they'll cut purchases or trade down to lower-quality plonk at the same price they used to pay, she said.

"People will end up drinking absolute rotgut. This is not going to be good for the wine industry, it will end up costing jobs."

Consumers here glugged back 108 million bottles of wine last year, figures from the Irish Wine Association show.

However, revenue figures show consumption in the first 10 months of 2012 fell by 1.4pc, and higher prices on top of squeezed incomes could hit that further in 2013.

Shortage

Ms Smullen said there was also a worldwide shortage of wine after a bad grape harvest in 2012 and rising demand from countries such as China, putting upward pressure on prices even before the Government decided to take a bigger share.

"Things will be quiet in January and February because nobody buys much wine then anyway, but come Easter people will be flocking across the Border to stock up," she predicted.

The Government tried raising the excise on wine in 2008, but this led to crossborder shopping and sales here falling by 9pc a year until they reversed the decision.

Beer and cider excise rose by a more modest 10c a pint in the budget, meaning the wine sector is facing the most pain.

CONSUMERS nursing festive hangovers face another headache in the coming weeks as wine prices rise.

Wine shops and supermarkets which delayed passing on a budget duty hike until after the Christmas splurge are set to finally raise prices.

Finance Minister Michael Noonan's excise hike slapped an extra €1 in duty on each bottle of wine – with VAT on top of that bringing the increased government take to €1.23.

While most supermarkets and off-licences promised to delay passing on the higher tax rate to consumers until after Christmas, prices are set to rise as stores import fresh stocks at the higher tax rate in the coming weeks.

It all means the Government will be taking a massive €4.65 from a typical €7 bottle of wine – two thirds of the price paid, said wine industry consultant Jean Smullen.

However, consumers living on squeezed incomes cannot afford to spend more on wine – meaning either they'll cut purchases or trade down to lower-quality plonk at the same price they used to pay, she said.

Industry

"People will end up drinking absolute rotgut. This is not going to be good for the wine industry, it will end up costing jobs."

Consumers here glugged back 108 million bottles of wine last year, figures from the Irish Wine Association show.

However, revenue figures show consumption in the first 10 months of 2012 fell by 1.4pc, and higher prices on top of squeezed incomes could hit that further in 2013.

Ms Smullen said there was also a worldwide shortage of wine after a bad grape harvest in 2012 and rising demand from countries such as China, putting upward pressure on prices even before the Government decided to take a bigger share.

"Things will be quiet in January and February because nobody buys much wine then anyway, but come Easter people will be flocking across the border to stock up," she predicted.

The Government tried raising the excise on wine in 2008, but this led to crossborder shopping and sales here falling by 9pc a year until they reversed the decision after which purchases rose again, she said.

Wine now accounts for over a quarter of all alcohol drunk in Ireland.

The O'Briens chain of 32 wine shops said they would be passing on the excise hike from January 7, so the price of many wines would go up, although they would hold some at the old price.

"We are also working hard to source good wines at lower prices so if someone typically spends €10 on a bottle, there'll still be lots of nice wines at that price," said Lynne Coyle, head of wine buying with O'Briens.

Retail Excellence Ireland said customers were unlikely to shop across the border for wine in large numbers, because the exchange rate wasn't favourable to doing so.

"With wine people aren't very loyal to brands, they buy by price, so if they can still get a bottle for €5.99 in the local convenience store they will, even if it's a different one than they used to buy," he said.

Beer and cider excise rose by a more modest 10c a pint in the budget, meaning the imported wine sector is facing the most pain.

Women drink more wine than men at 55pc of the total and it now accounts for over a quarter of all alcohol drunk here.

Australian, Chilean and French wines are the most popular.

Irish Independent

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