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This year’s budget added a further 50 cent government duty to every bottle of wine imported into the country. In Paradiso, we will be adding that 50c when our suppliers add it to our invoices. No hiding it, no pretending to ‘absorb’ it for a short while, and definitely no multiplying it. Here’s why:-
What we learned from last year’s budget increase in duty of €1 was that the old system of marking up wine was broken, redundant in a price-conscious climate where the government is likely to impose more regular increases. That old pricing system involved taking the cost of a bottle, including all of its duty and taxes, and multiplying it by whatever the in-house multiplier happens to be. Multiplier numbers vary widely across the industry, and the issue isn’t whether specific multipliers are fair or not; it’s simply that continuing to multiply duties and taxes makes no sense. We set out our stall in detail last January.
Basically, as the amount of duty on each bottle increases year on year, a system that multiplies that increasing number passes on more cost than is necessary. Over time, it can only become ridiculous. In January 2013 we switched to a wine pricing system that adds a flat rate to the cost of every bottle. Therefore, if the supplier’s price goes up by 50c then our retail price will too, while our profit figure remains the same. Because we don’t multiply the taxes.
Besides, government taxes and duties aren’t the only things that change the cost of wine during a year. Many wines change price when a new vintage of a brand comes in; or a supplier may offer discounts or withdraw them. The increase or decrease should be passed on, but it shouldn’t need to be multiplied. We believe that our flat-rate mark-up system is fairer, and becomes more so with each new tax increase. And we’re confident that it reflects the best approach to give real value for the customer, the more so as you go up the price range of the wine list.
Posted on: 18 October 2013