Are you just back from a sun holiday in the south of Europe to find yourself flinching every time you see the price on a bottle of wine at home? You’re not alone.
So why is wine so expensive in the Republic? Firstly, because everything is more expensive here, although it does depend on which country you compare it with. A cup of coffee, a sandwich or a bag of groceries will be significantly cheaper in Spain than in the State.
Many cafes and restaurants in Spain, Portugal, France and Italy are family-run affairs. Staff wages are lower, as are rents, transport and a host of other services and goods. However, visitors to Denmark, Sweden, Norway, the Netherlands and other north European countries will find prices that are quite similar to our own in many cases. However, even in Scandinavia wine is often less expensive than Ireland. Why? This is mainly down to size, location and taxes.
The Republic is small, with just 5.3 million inhabitants and cannot benefit from the same economies of scale enjoyed by larger countries such as the UK. Wine importers here will not be able to gain volume discounts from suppliers and must ship in smaller quantities, thereby increasing transport costs.
READ MORE
Location plays a role too. Almost every bottle must be transported by ship from the Continent or farther afield. This leads to greater warehousing and delivery costs. By contrast, a sommelier in Portugal may be able to pop around to his or her local wine producer to stock up, cutting out any middlemen.
But the main reason wine (along with beer and spirits) is so expensive is excise duty and other taxes. The duty on wine is €3.20 a bottle, and double that for sparkling wine. That is before VAT at 23 per cent is added on to the final price. This effectively means the government puts a tax on a tax. It also means that before you look at any other costs, the price of any bottle of wine is at least €4. We vie with Finland to have the most heavily taxed wine in the EU. Producer countries such as Spain, Italy and Portugal have zero excise duty and slightly lower VAT rates too. We also have minimum pricing, so a standard bottle of wine with 12% abv will cost you at least €7.40.
Distributors, retailers and restaurants in the Republic probably work on similar or lower profit margins to their European counterparts, but their costs are so much higher. The drinks industry has been campaigning for lower excise duties for decades, but so far with little result. I think we will continue paying very high prices for our wine, with most it going to the government.
