The wine aisles at Lidl are depressing if you care about the wine industry
I popped into Lidl today to have a look at their wine offering. Lidl is one of the two German ‘discounters’ (along with Aldi) that have changed the whole supermarket model in the UK. They don’t market by price promotion, but rather by selling everything cheaply, and making it clear that this is a cheap place to shop, not a fancy one.
Their wine is pretty much all private label (or buyers’ own brand, another term for the same thing), and most of the range is bulk-shipped and bottled in Germany. There are a few branded products, but not many.
There are lots of wines still priced under £5, and I saw two that were under £4. This is remarkable, considering that a £5 retail price on a 13% alcohol wine means that £3.46 is taken up by duty and VAT on that duty, leaving just £0.95 (ex VAT, which is 20% in the UK) for the cost of the wine, the bottle, the screwcap, shipping, contract bottling and any margin for the retailer.
But let’s dip below £5 and see what the figures are. Now I’ll assume that these are at 11% alcohol, where the duty plus VAT on the duty is £2.92
- A bottle at £4.25 – cost for wine and everything else is £1.11
- A bottle at £3.99 – it’s £0.89
- A bottle at £3.95 – it’s £0.86
- A bottle at £3.89 – it’s £0.81
Look at these figures. If Lidl were given the wine for free, I’d be amazed if they could ship the wine, contract bottle it, pay for a bottle plus a screwcap, deliver this to the store and offer it on the shelf and still make some margin.
Maybe this is good news for those on a tight budget. But it’s really depressing for anyone who cares about wine.
We can discuss the knock-on effects of having wines in the marketplace that are this cheap. Does this make it so much harder for everyone else who is paying sustainable prices for wine?
Is this wine a loss-leader, because people are price sensitive about wine, and conclude that Lidl is a really cheap place to shop, because the wine is really cheap?
