Trading up – why spending more gives you better value

You want to buy a bottle and you want it to taste good, but you don’t want to pay over the odds. Sensible. Your budget is reasonably elastic, so should you go for the £5 bottle or splash out on the £10 one? Is it worth the extra?

Overwhelmingly, the answer is yes. When you pay a bit extra for a bottle, wine quality increases disproportionately. The reason is simple: fixed costs and the duty rate. These stay the same whatever the price of the bottle, as long as it’s 15% alcohol or under. So when you double your spend from £5 to £10, the amount you spend on the liquid in the bottle increases by over nine times which gives you better value. The diagram below makes it nice and clear.

BreakdownThe Government’s Share

As you can see UK, duty and VAT make up a significant chunk of the bottle price – a much larger proportion on a cheaper wine. In fact, duty has risen 57% in the last six years, since 2008 when it was £1.30. Plus VAT’s increased, too. Indeed, if you look at duty rates around Europe (see chart below), you will see the UK’s is the highest – Finland is the only country that comes close.

Duty GraphSo, next time you are choosing a bottle, just bear in mind the breakdown of costs shown above. You’re much more likely to be opening a delicious bottle of truly handcrafted wine with unique charm and character if you’re paying more than the baseline price for the actual liquid.

Now, which wine was it you wanted to buy?

About Laithwaites Wine

Laithwaite's began in 1969, when Tony Laithwaite took a job washing bottles in Bordeaux... and fell in love with real wine and the people who make it. When he borrowed a van to share these delicious wines with friends and neighbours at home, things went so well that boutique wineries were soon queuing to take part. Today we're the UK's No.1 home-delivery wine merchant, with over 1,500 wines to choose from... including red, white and rosé, plus Champagne and sparkling, beer and cider.