Binge Drinking, Alcohol Prices and Alcohol Taxes

The respected American Association of Wine Economists recently published a very interesting Working Paper on the links, or otherwise, between binge drinking, alcohol prices and alcohol taxes.

I am not for one second trying to take away from the issue of binge drinking itself. We have a huge problem with it here in Ireland and it continues to cause significant problems both socially and economically. It is, in my opinion, greatly exacerbated by the below cost selling of alcohol and the way that alcohol is often marketed and promoted.

The irony is that the Government that permits the sale of alcohol in this way is also the same Government that tells us they are doing our national Health a favour by increasing the taxes on alcohol (and wine in particular) to protect us from harming ourselves. It's a ridiculous smokescreen.

The full report is both very detailed and fascinating. For those who just want a brief overview, I quote the following Summary:
"A large body of evidence now indicates that binge drinkers are not highly-responsive to increased prices or taxes, and may not respond at all. Non-responsiveness holds generally for younger and older drinkers and for male and female binge drinkers alike. Increased alcohol prices or taxes are unlikely to be effective as a means to reduce binge drinking, regardless of gender or age group."

The full Working Paper is here.

American Association of Wine Economists: www.wine-economics.org

Silly Wine Tasting Clips

The old ones are the best... we don't seem to be able to take the mickey out of ourselves as much as we used to.....

Richard E Grant - Posh Nosh:

Alan Partridge Wine Tasting

Fry and Laurie

Absolutely Fabulous

And of course, Sasha Baron Cohen's Borat...toe curlingly cringy....

(warning: some people may be offended by some of the content in this clip)

Near Miss....

I actually saw a still of this on RTE news a few weeks back, and didn't really notice that the boulder (although missing the house) continued on straight into a vineyard....

Lucky escape for the house - not so lucky for the vines...

Burgundy 2012 Prequel - the 10 Best Unsung Burgundy Producers

As we heard towards the release of our Burgundy 2012 Primeur Offer, a lot of the talk is of price increases by many of the producers to combat the third successive small crop. However, in this context, many of the increases are understandable as producers have effectively lost the equivalent of one whole vintage out of the last three.

Reputation costs extra as well - and is of course well earned. But there are many unsung producers offering great wines at very reasonable prices. Respected wine writer and critic, Bill Nanson, recently published his "10 Best Unsung Burgundy Producers" in an article for Wine Searcher.

At No. 1 is our friend from Gevrey Chambertin, Damien Livera. We have been working with him exclusively since the 2008 vintage and have been praising his wines. Bill writes:

Number 1. Domaine des Tilleuls is run by the Livera family of Gevrey-Chambertin. Damien Livera took over from his father, Philippe, and is making dark, concentrated, but brilliantly balanced Côte de Nuits Villages, village Gevrey-Chambertins and even a little Chapelle-Chambertin Grand Cru. It's such a shame that there is so little of that latter wine. Damien is quietly spoken, a little shy even, but his wines are packed full of personality. Factoring in cost, his 2010 Côte de Nuits Villages was one of the best wines of the vintage.

We have a small amount of his 2010 Cotes de Nuits Villages left, along with his stunning 2010 Gevrey Chambertin "Clos Village"

If you are looking for any other tips, the full article is here: Wine Searcher - The 10 Best Unsung Burgundy Producers

How to open a bottle of wine without a corkscrew...

I came across this..... looks amazing.....not the way you might think...

Not sure what happens the sediment though...!

My Grapefruit is corked!

Yep, you read that right!

I'm a sucker for red grapefruit and I noticed that our local supermarket has one of its regular "3 for €2" deals running that includes nets of red grapefruit. Each net has 4 or 5 grapefruit - so for €2 you can get 12-15 red grapefruit. Not bad...but if it seems to good to be true, then....

Every single one I have tried has been "corked". Exactly the same smell and taste as a wine tainted with TCA. Even my fingers smell of cork taint after peeling one. So I Googled "corked fruit" and it turns out I'm not going loopy (well, not on this occasion anyway) and it's possible for fruit to be affected by TCA in the same way as wine - with fruit it's the wooden boxes it comes in or storage that can cause the problems.

Maybe it's just our local shop, and just my bad luck, but my guess is that there's a reason you can buy 12-15 of them for €2....

So if you've never had a corked wine and you also like red grapefruit (I suppose that narrows the numbers down a bit) nip out to your local supermarket and see what you're missing! You might be lucky.

Budget 2014 - The Aftermath...

It’s the middle of November – we have to move on and stop the whingeing….but just one more lash…..!

My predictions for the budget turned out to be (predictably) way off the mark. It was probably too much to think that the Government would reduce Excise Duty, but the fact that they increased it really surprised me. Proof indeed that Lobby Groups work – what was that? Oh yes, there is no independent wine group/lobby in Ireland…..

The Government’s promise, belatedly, to “look at” minimum pricing on alcohol means that their excuse for raising Duty in the interests of protecting health is just a sham and a smokescreen. The fact that they permit below-cost selling of alcohol whilst claiming to protect our health by charging us more is laughable. The introduction of minimum pricing is a step in the right direction – but how long will it take…..

In the meantime, here are five things that I predict will happen…

No. 5

 

Cashflow will become very tight for importers and distributors. Excise Duty is paid to the Revenue at the end of every month irrespective of whether they have been paid by their customers. The charge is based on the volume of wine taken out of the warehouse during that month. A year ago, every 1,000 cases taken out would incur a Duty cost of about €24,000. Now it’s just over a staggering €38,000. And the importer or distributors might not get paid by their own customer for 60 / 90 days – or longer – or not at all. But the Revenue have their cash.

 

No. 4

Some smaller (and possibly larger) companies will go bust. It’s simply not possible to cashflow the purchase of wines (which generally must be paid to the producer after 60 days), cashflow the Excise Duty after 30 days – and then not get paid for more than 90 days…

No. 3

As a consequence, there will be a loss of diversity. Your choice of wines on the shelf will contract as only the bigger importers or retailers can afford to outlast all the rest. There are some amazing niche importers with wonderful wines who don’t use warehouses – they are generally too small. But guess what? Instead of paying the Excise after 30 days, they actually have to pay it in advance! Even before it lands on Irish soil! Even before they physically sell a single bottle. Now apply that 62% increase in Excise over the last 12 months to their scenario….

No. 2

You will get a lower quality of wine. Some people just don’t want to pay any more than they were paying before. This applies to restaurants and hotels as much as it does to the punter looking for a bottle of wine to take home. So if you paid €8 for a bottle of wine a year ago, there is now an extra €1.50 (at least) of tax and mark-up in there. If you’re still getting a bottle at €8, there’s only one thing that can have changed – the cost of the actual juice in the bottle. Be prepared for some pretty gut-wrenching stuff coming your way. And I don’t mean stuff that costs €1.50 from the producer (there can be a lot of very decent stuff) – I mean stuff that costs 40 to 50 cents. At that level it’s not really wine, it’s an industrial liquid manufactured like many other industrial liquids. And that’s not snobbishness – it’s a fact.

No. 1

Smuggling. Wine has suddenly become very attractive to smugglers. And I don’t mean going to Newry and stocking up your van in the Buttercrane centre and selling a few cases to your mates. Yes it happens, but you still have to pay the UK Excise.

The Revenue’s Annual report for 2012 has some interesting details on “Excisable Products Seized in 2012” (Page 47). There were just over 8,000 seizures of cigarettes yielding a not insignificant 95 million fags. Clearly this is an on-going challenge. I wonder why? Oh yes, the tax is so high that it is therefore attractive to smugglers.

There were a significantly smaller number of alcohol seizures….. just 359 in total, bringing just over 33,000 litres. Much of this was illegally produced spirits, or blended spirits, or guys making poitin – and so on. But even if we assume it was all wine, it would be just over 3,500 cases. Sounds a lot?

 

Well, consider this. The average 40 foot truck can hold anywhere between 1,000 and 2,000 cases depending on how they are packed. Let’s just say you deliver to Europe on a regular basis, but your truck normally comes back to Ireland empty. If you stop and fill it with wine in e.g. France (where there is negligible tax), and decide not to declare it on entry, you are saving just over €75,000 in Excise Duty. That’s a pretty hefty pile of cash. And that’s just one truck.

Then consider this. You’re a bar / restaurant / hotel that is under pressure on pricing. All the regular companies are coming in with their wines, but they are all a bit expensive because of the high Excise. You can suddenly get your wines much, much cheaper from a local fella who drops them off once a week. Not all your wines – maybe just the stuff you use for weddings / functions where you only need a red and a white and price sensitivity is key. So you take 20 cases a week. And there are another 20 like you in the locality. That’s 400 cases a week – and the truckload of wine is gone in about 1 month. Somebody just made €75,000. For the consumer, there is absolutely no way to identify if the wine has had the Excise Duty paid.

Now consider this. How many alcohol seizures (specifically wine) have been at Ports – you know, the type of places that lots of trucks pass through? As far as I can see, none. Zero. Zilch.

I think wine smuggling will become the new petrol smuggling. How sad.