If you’ve been visiting the wine shops over the past month, you may have noticed something peculiar. Despite the recent duty hike, not all wine prices have gone up. In some instances, like at Asda, prices initially remained stable, with a few wines experiencing a, greater than duty change, surge much more recently. Meanwhile, The Wine Society has managed to keep its prices unchanged. So, what’s going on?
A recent commentary by the chief executive of the Wine and Spirit Trade Association (WSTA) in The Drinks Business sheds light on this situation. According to the WSTA, many retailers and wholesalers are currently selling off their duty-paid stock, which was purchased before the 1st of August, until it’s depleted. Only then will they adjust their prices to reflect the new duty rates. But that’s not the whole story. Inflationary pressures are also at play, affecting various elements of the supply chain, including transport and glass Packaging Waste Recovery Notes (PRN) prices.
A similar situation has been revealed by a survey by Harpers that shows over 50% of independent wine retailers have already raised their prices and the majority of the rest plan to do so with new stock. The retail recommended price (RRP) has risen by approximately £1 for wine. The article also highlights that independent merchants were largely not consulted by the government regarding these duty changes. Various other pressures like staffing, energy and logistics costs are also affecting these retailers.
While they may be a short a reprieve for consumers, this situation is unsustainable for businesses in the long term. They can’t absorb these additional costs indefinitely. So, if you’re wondering when all wine prices will finally increase, the answer is simple: it’s just a matter of time.
The implications of the new duty system are far-reaching. It’s estimated that UK wine drinkers will be burdened with an additional £500 million a year in extra duty and VAT. The WSTA has been vocal in its criticism of the UK Treasury’s forecasting models, arguing that they fall short in accounting for how these price changes could affect consumer demand.
So, the next time you are buying wine and puzzled by the pricing, remember that it’s a complex interplay of factors. Enjoy the current prices while you can, because they’re set to rise sooner rather than later.
