News of the move came during a discussion on the current challenges for wine brands in the UK with Simon Doyle, who is managing director at the UK office for Concha y Toro – the owner of Isla Negra, as well as Casillero del Diablo.
Commenting on a planned duty increase for wine from 1 August – which will see wine taxed by around 44p more per bottle – he said that the Concha y Toro was looking at ways to try and reduce such a rise by making changes to one of its key products.
Pointing out that at least a 9% rise in duty will take it up from £2.23 to £2.67 per bottle, he said that VAT would then be placed on top of that, as well as a retailer margin of 18-20%, meaning that an entry-level wine could see its on-shelf price rise by at least 65p.
“When someone only has £5 to spend on a bottle, you have got to really work to see how you can mitigate these costs,” he said, before commenting, “And the only way to do that is to reduce your duty exposure – no-one has the efficiencies to do it any other way.”
Referring to a change for wine duty that will broadly tax alcohol according to strength, the only way for wine producers to lower their duty exposure is to drop the ABV on wines to below 11.5% and that way avoid being taxed at the 12.5% abv rate, which will apply for all wine between 11.5% and 14.5% abv (see table, bottom).
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