"But I can buy it in Italy for half that price!" is a thought we had many times looking for a nice Italian red in Australia before becoming wine importers. It can't cost that much to bring it over can it?
If you've ever wondered where your money goes when you are buying premium imported wine, we're here to shed a little light on it. A rough breakdown of the RRP, before discounts, for one of our entry level wines (though still premium compared to most wine consumed in Australia), is that 25% goes to each of: the producer, the federal government, our logistics partners and us. But let's look at the last three of those in a little more detail.
Taxes
It's a sad fact that the federal government takes about as much as the producer will receive for these wonderful wines. The biggest hit is the Wine Equalisation Tax, which is calculated at 29% on the wholesale value of the wine, rather than a duty on the alcohol content (like it is for beer or spirits). We haven't managed to wrap our heads around the rationale for that tax, but it means $$$ for fine wine, and barely noticeable for the supermarkets, who control 80% of wine sales in Australia, importing "wine" for 1 or 2 Euros per litre (that's how you can find a $20 bottle of European wine on Australian shelves). Then of course there is 10% GST, 5% import duty and I suppose if we ever make a taxable profit, a little more of your purchase price will end up in government coffers.
Moving bottles
Our logistics partners get the wine from the cellar door to a warehouse in Sydney, store it in optimal conditions, and then deliver your orders to your door. You might be surprised to know that the cost of transporting wine ends up being the inverse of the distance travelled for different parts of its journey. The most expensive: from our warehouse to your door. The least expensive: getting it from a European port to Sydney. Somewhere in the middle, the truck to and from each port. It's all about economies of scale. As you hopefully already know, we also buy high quality carbon credits to offset our estimates of the emissions from all of this (refrigerated) activity, as well as the production of the bottle and wine. All the carbon details are here. This cost bucket doesn't increase with the value of the wine, so the % of RRP reduces with more expensive wine.
Vino Cammino
Then there is the 25% for Vino Cammino. Of course, it's helpful for our margin when people buy at full RRP, but the vast majority of our sales are either at 15% off during pre-arrival sales, or 10% off for our mailing list members at any other time. From the remaining margin, we carve out things like payment fees, foreign exchange margins, marketing expenses and software platforms that keep the business running (e.g. the website). Needless to say, our margin is still quite a way from paying for the fun but expensive bit of sourcing wine we love/maintaining relationships with our existing producers etc.
We might need another piece in the future on the impact of industrial v artisan winemaking techniques on price, and quality...
In the meantime, if you're unsure where to begin or continue your own fine wine journey, our curated packs are a great place to start and they're always more than 10% off RRP.
Happy drinking!