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Dublin, Ireland
Hi, I'm Dermot Nolan, and I became a Master of Wine (MW) in 1997, and resigned from the Institute of Masters of Wine in 2023 after being an MW for exactly 26 years. I opened a wine shop in Dún Laoghaire, Ireland, called The Wine Library, which closed in 2018, and this is my personal wine blog. I will do my utmost to be fair and responsible in my posts – please read my Who Pays article in re the ethics of wine trips and writing. I have worked in wine education, retail, and consultancy since 1990. I was a Director of the Institute of Masters of Wine (IMW) from 2008 to 2014 and was also a member of the Events Committee, founder of the Trips Committee, and member of the Governance Committee. Having had problems with potentially libellous comments from unidentifiable posters, I now require that if you post a comment, you must identify yourself properly or it won't be published. Please note that I do not review products or services on request so kindly don't ask. I value my independence and I believe my readers (few that they may be) do so also.

Thursday, November 16, 2017

Yet more on minimum pricing

Recently a colleague posted a piece on Facebook about how annoyed they were that Lidl was selling a Muscadet for €3.99, down (allegedly) from €7.99, and wondered about the "plonk inside the bottle". However, I noticed at once that this is a wine imported into Ireland by The Wicklow Wine Company and was able to assure her that it is a good wine. But WWC sells the wine for €14.70 so how is it a) selling for €3.99 and b) was it ever €7.99 to begin with?
Well, it certainly can't sell at a profit for €3.99 because excise duty is €3.19 per bottle, which comes to €3.92 with VAT. So, the only way it can be sold profitably is if the cost of the wine, shipping, warehousing and distribution comes to less than €0.07 per bottle. I know that the wine in question costs over €2.50 ex-cellars so the landed, duty-paid ex-VAT cost of the wines is no less than €5.69 assuming no cost for shipping etc.
In re the second question I've never seen that wine on sale in Lidl for €7.99 which it has to have done at least three months before it was reduced to a sale price - how do they get away with this? You'll have to ask Lidl. Somewhere in their head office is a bottle of this wine with a sales receipt for €7.99 attached suggesting it was once on sale at that price but I defy Lidl to show photographs from all their stores showing this wine ever on sale in the last three months at that price.
I had a conversation with a major buyer on the plane to ProWein earlier this year. In that conversation I was informed that this buyer had been told by a buyer from one of the discounters that on ONE wine alone they lost €9 million in a year by selling it below cost. Yes, €9 million. Think how that much money could help with many of the social issues in this country.
I mention all of this because the UK Supreme Court recently approved the introduction of minimum unit pricing of alcohol in Scotland. There is a substantial body of evidence demonstrating that minimum unit pricing (MUP) is very effective in reducing harmful drinking but, from the point of view of a small retailer, the other great effect of MUP is preventing abuses such as below-cost selling of beer, although it is much harder to prevent below-cost selling of wine. For example, the quoted Muscadet has 12% ABV so at €0.50 per unit that would have a minimum price of €4.50, still below cost.  Given that all small retailers have to make a margin on all sales the fact that a major chain can sell below-cost LEGALLY (thanks to the now defunct PDs) is a major difficulty in offering a really interesting range of wines and services to the Irish public. Business is tricky enough as it is without having to face this sort of bullying in the marketplace.

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