Supermarket Discounting

Joanna Simon's credit crunch recommendations in last weekend's Sunday Times made me wonder exactly how UK supermarkets can offer such low prices. Just as we were writing off the sub-£3 price point, she endorses Asda's own brand Chilean Cabernet for £2.98. Not to be outdone, Jane MacQuitty ("Wine to drink in a recession", Times 25 October) is also raving about Asda, whose Montepulciano - "ridiculously cheap and ridiculously tasty" - also comes in at £2.98.

So how are Asda et al doing it? Are they making a full margin on these recession-proof wines? If so, presumably the producers are selling at rock bottom. The first part of the answer is that they buy in extremely large volumes. Aldi, which has 400 stores, does not buy in lots of less than 150,000 bottles, even for its finer wines. (Tim Atkin reports in The Observer that Aldi's wine buyer claims it is possible to sell claret as cheaply as £2.64, although he is "very reluctant to buy Bordeaux at that level". "Not as reluctant as I would be to drink it", replies Atkin.)

Supermarkets have come in for criticism in the past for inflating the face value of their wines to the extent that their eye-catching 'half-price' offers are actually nothing of the sort, equating in some cases to only the true market price. Naturally, the supermarkets strongly deny this - Tesco says "'We have an absolute rule that for any half-price offer, the wine has to be worth its full price." All very well, but it is almost impossible to verify what a wine which may not be available elsewhere is really worth.

Discounts notwithstanding, a sub-£3 bottle of wine which respected critics assure us is drinkable is impressive and if someone's profit is not being mightily squeezed then the base cost of the wine must be tiny. Bear in mind that £1.46 of each bottle is duty and 17.5% is VAT - that brings Asda's Chilean Cabernet down to £1.25, before we start to factor in transportation, storage and the margins of the supermarket and any agent/importer. Sterling's current weakness means UK buyers are losing out on exchange rates too. Simon says we're fortunate if the wine component in a sub-£4 wine is even 50p, meaning a £2.98-er contains...what, 40p, 35p? Credit is due to the winemakers who are able to turn out drinkable products on such budgets. I for one would love to see the figures.

Info Mine - Carmenère

The Wine Mine Blagging Toolkit - 5 wine nuggets with which to impress your friends...

1. Nowadays, Carmenère is grown almost exclusively in Chile, although pockets can also be found in northeastern Italy and California.

2. Carmenère in France was decimated by the phylloxera epidemic of 1867. The French never re-introduced it due to its susceptibility to pests and relatively low yields. In contrast, Chile has remained phylloxera-free due to its geographical isolation (it is sealed off by the Atacama Desert, the Andes and the Pacific).

3. Carmenère in Chile was for many years incorrectly identified as Merlot, until genetic analysis in the 1990s revealed it to be the distinct Bordeaux varietal, originally planted in the Medoc. Chilean winemakers appear to have suspected that the would-be-Merlot was not the real McCoy, referring to it as rather apologetically as Merlot Chileno.

4. Carmenère needs more time on the vine than Merlot. It requires a fairly warm climate and does not respond well to high levels of rainfall.

5. Carmenère is one of the original six native Bordeaux varietals (the other five being Cabernet Sauvignon, Merlot, Cabernet Franc, Malbec and Petit Verdot).