Marketing

Wine tax now over 50% of standard bottle

With a per capita consumption of 16.6 litres, 8.5 million cases of wine were sold in Ireland in 2014, up slightly from the 8.2 million case figure for 2013 but below the 2011 level of 9 million cases.

There’s been a 62% increase in excise on wine since 2012 and the Irish Wine Association, which releases its annual Irish Wine Market review today, states that the increase in excise continues to have a detrimental effect on the cashflow of wine distributors and importers and it calls on the Government to reverse excise on alcohol in the next Budget.

Wine remains Ireland’s second most popular alcoholic beverage after beer (47%), accounting for 27% of alcohol consumption, while women constitute 57% of wine drinkers here. According to the report 50% of wine drinkers choose white wine with 47% choosing red and 3% choosing Rose.

While the off-trade continues to enjoy the lion’s share of wine sales, at 81%, the wine distribution channel breakdown in the off-trade has changed significantly since 2013 with discounters increasing their share of the wine market to 23% from 19% while the multiples slip their share back to 48%, thus losing two percentage points from 2013.

Independent outlets lost a further one percenatage point in 2014 and now hold just 10% of the wine market.

 

Chile top importer

Chile has overtaken Australia as the Number One country of origin for wines consumed here with sales of just under 2 million cases to Australia’s 1.6 million in 2014.

This means that Australia’s market share has slipped from 24% in 2012 to 18.6% in 2014 while that for Chile has risen from 21% in 2012 to 23.5& in 2014.

France (1.2m cases), Spain (1m cases) & Italy (869,657 cases) retain their third, fourth and fifth positions repectively.

The most popular price point in 2014 was in the range €9-€9.99 which, at 31% of the market, grew share by 7.4%.

 

The grape depression

However the excise on wine continues to be a point of consternation to the trade. The total excise payable to revenue is now €14,640 higher per 1,000 cases of wine than it was in 2012. This, the industry says, has put jobs at risk and has made it impossible to scale up and take on new talent.

The tax take on a standard bottle of wine is now over 50% of the retail price with Irish wine excise the highest in the EU where 14 countries pay no excise at all on wine.

In 2014 the sector paid €354.6 million to the Exchequer equating to 31% of the total excise collected on alcohol. Wine was also responsible for some €280 million in VAT in addition.

Excise on wine is now 106 times higher in Ireland than France while Spanish tourists pay almost twice the price for wine in Irish restaurants that they do at home.

 

EU League Table: Excise per bottle of wine

Ranking Country Excise per bottle
1 Ireland 3.19
2 UK 2.85
3 Finland 2.55
4 Sweden 2.03
5 Denmark 1.17

 

According to the report, 1,100 people are employed directly by Irish wine distributors and importers and thousands more jobs are supported in the 13,000 pubs, restaurants and independent off-licences that sell wine.

“Excise is the number one threat to the Irish wine industry,” commented Michael Foley, Chairman of the Irish Wine Association and Marketing Director at Findlater Wine & Spirits, “Draconian excise hikes have meant that since 2011 the tax take from a standard €9 bottle of wine has increased from 39% to 54%.

“This impacts on the cashflow of Irish wine importers and distributors as many have to pay excise as an upfront cost.

“The vast majority of these jobs are in small, family-operated businesses across Ireland, making it difficult to take on new talent. The message coming from the industry is clear: reverse excise increases and support thousands of small businesses and jobs across the industry.”

Evelyn Jones, Government Affairs Director for NOffLA (who’re part of the Support Your Local campaign) added, “The Support Your Local campaign is calling for excise tax on alcohol to be cut, stating that these taxes are damaging competitiveness and costing jobs.

“Today’s report confirms that excise is preventing SMEs from investing in their businesses, due to cashflow constraints. NOffLA carried out a survey of our members earlier this year which found that if excise duty is increased again in the next Budget, 51% of independent off-licences will struggle to remain open while 44% will be obliged to reduce staff by at least one member.

“Conversely, if the excise increases were reversed, 70% would hire one or more extra staff and 42% would increase staff pay.”

 

 

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