An article in The Daily Mail based on an infographic from Naked Wines reveals that there is only 37p worth of wine in a £5 bottle. This compares with a £10 bottle in which the wine value is £2.76.
Duty is £2.16 per bottle irrespective of the price so the underlying argument is that duty and VAT on a £5 bottle is £2.99 and £3.83 on a £10 one. Packaging and distribution will be similar whatever the price. In other words, the dearer the bottle, the less duty you pay as a percentage. By spending another fiver, you get up to five times the value of wine.
Should you buy the £10 bottle
There is nothing wrong with the rational. In practice it can be more complex. Wines are somewhat of a loss leader for supermarkets, margins may be lower to entice customers. If you like a £5 bottle even if the wine value is only 37p, then carry on enjoying it. If you do splash out and spend £10 you may enjoy it a lot more! I’ve enjoyed some £5 special offers and been disappointed by some dearer ones, averaging out though, like most things, you only get what you pay for, perhaps £7.50 is a good compromise!