The price of wine

HERE’S a half hour of audio I’d suggest to anyone interested in wine – a recent episode of The Food Programme that I heard via the BBC iPlayer (Sundays at 12.30pm; repeated on Mondays at 8pm;  available indefinitely on iPlayer).

Sheila Dillon presents The Food Programme on BBC Radio4 (c) BBC

Presented by Sheila Dillon, the Food Programme is usually devoted to just one topic. It might be a particular food tradition or trend — encompassing its history, a shopper’s guide, and recipes — but more often it’ll be all about the bigger picture,  the economic, political and health aspects of food and drink.

The show I just heard is about off-licences — the drinks sellers trading in the margin left behind by the supermarkets which sell a whopping 70% of alcohol in the UK market. (Yes, the business cost structures in Ireland and Britain are very different, as are the tax regimes, so the markets are quite different.  But they’re sufficiently similar to make the show essential listening over here too).

At one point in the broadcast, reporter Dan Saladino talked to an industry insider, Tesco’s beer, wine and spirits director, Dan Jago. When asked whether heavy discounting of wines by supermarkets was “depriving the wine industry of much-needed investment,” Jago made two interesting points.

“When you have an extraordinarily large oversupply of wine you end up with a supply-and-demand equation that would be the same as any industry,” he said.  “When we [Tesco] are offered vast quantities of wine at very  low prices, one of the things we’d want to do is pass those savings on to our customers…”

In this, Jago is confirming something the industry knows well, but which many wine consumers are still unaware of — or in some cases possibly don’t want to believe — namely, the tectonic shift in the way wine is made and how it’s priced; and also that there is a sustained surplus on world markets.

The wine pyramid

You could picture the world’s wines as being stacked up in a pyramid: At the top, tiny quantities of premium wine at frankly unconscionable prices; in the middle and at the bottom, an enormous ocean of perfectly pleasant wine at everyday prices. Well, in recent years that pyramid has both grown in size, and flattened out considerably.

There will always be a specialist market for expensive wines: the rich we will always have with us. As I’ve pointed out in my Examiner column before, the market for high-end wines costing hundreds or thousands per bottle – often sold en primeur – can only be understood if you perceive it as a millionaires’ auction.

But the really interesting stuff is happening at the middle and bottom of that pyramid.  In general, the  quality of regular, everyday wine has shot up, and the quantity of it has exploded in the last twenty years or so. You don’t need an economics degree to work out that prices ought to be tumbling across the board.

Which brings us to the second interesting point made, perhaps inadvertently, by Dan Jago, when he addressed the discounting issue  by minimising the effect of it:

“But it’s a mix,” he said. “Of the 850 wines in this store, you’ll probably find no more than 70 or 80 bottles on promotion at any one time. So it’s less than 10% of the range being promoted.”

That’s exactly the point I would quibble with. Instead of transparently, consistently lower prices, we are bedazzled by a roller-coaster of special offers and bogof (buy one get one free) deals.  I’m not suggesting traditional deals such as case discounts or bin-end sales are in some way problematic for the consumer. But I do believe consumers would be better served by straightforward transparent reduction across the board rather than the now-you-see-it-now-you-don’t special offers, many of which aren’t that special at all. ♦

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2 Responses

  1. I wish the government would outlaw discounts! So many fake ones and then punters get addicted to them.

  2. […] Blake Creedon, in another of our favourite Irish wine blogs, explains: “Instead of transparently, consistently lower prices, we are bedazzled by a roller-coaster of special offers and bogof (buy one get one free) deals.” […]

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