Can we trust between-country or between-state comparisons of wine costs?

There are lots of organizations who like to make comparisons between groups of people, whether they are in different states of the USA or different countries in Europe. The prices of this or that are compared, or we are told about health and behavior. Some of these organizations are governmental or semi-governmental, and have access to official information, while others are motivated more by profit.

In this post, I point out that even semi-governmental data are sometimes apparently rubbish. And my investigation of this also shows that the cheapest place to buy United States wine is not always in the USA itself.

Sometimes, the results of these comparisons surprise people. For example, a recent Wine-Searcher between-state comparison of wine prices within the USA (The price of state control for wine) showed that the Pennsylvania Liquor Control Board does very well, price-wise, in spite of having a government-mandated retail monopoly. Some people hate monopolies on principle, but this does not mean that the customers are hard done-by.

This type of situation is one that I have discussed before, in terms of the retail price of wine in Sweden (Why is wine often cheaper in Sweden than elsewhere?). In that previous post, I pointed out that Sweden's sole wine retailer (called Systembolaget) essentially has a fixed mark-up percentage on all wine, rather than having the mark-up vary from cut-to-the-bone loss leaders (at the bottom end of wine prices) to complete rip-offs at the top end of the scale.

This means that mid-price and high-price wines are cheaper in Sweden than they are elsewhere, often much cheaper. This situation potentially disadvantages the inexpensive wines, since their prices cannot be discounted, but this can be off-set by negotiating the producer’s or importer’s price based on the sheer volume of sales — Systembolaget is reportedly the third largest alcohol retail chain in the world.

Anyway, you can imagine my surprise when I read the recent Eurostat report called: How alcohol prices vary across the EU. This report is backed by the European Commission, so it carries considerable official weight. What it tries to tell me is that Sweden is the third most expensive country for alcohol, among the 28 countries in the European Union (EU), with a pretty big drop to fourth place (as shown in the graph).

Click to enlarge

The numbers in the graph are called Price Level Indices, and are relative measures of cost — the EU average is set at 100. For further comparison, there are another four European countries that are not (yet) part of the EU but are members of the European Free Trade Association (EFTA), whose scores are: Iceland (268), Norway (252), Switzerland (118), and Liechtenstein (n/a). Including these countries, Sweden drops from third to fifth.

Needless to say, I am not going to take this claim lying down. I cannot accept a set of data that flatly contradicts my own personal experience; at least, not without some investigation. Since I cannot investigate the Eurostat data, the only thing I can do is investigate my own subjective experience, by putting it on a quantitative footing.

To do this, I have chosen a set of wines, covering the range of possible prices and origins, and compared their prices between Sweden and elsewhere in the EU, and in some cases elsewhere in the world, as well. Below, I have included a few figures and tables reporting my results. In all cases, the objective data completely support my own subjective experience.

The data

The wine prices all come from Wine-Searcher. I do not subscribe to this service, so the only prices I have included are those made freely available. Sometimes the prices reported by Wine-Searcher include sales tax, and sometimes they don’t.

The following graphs are all stripe plots, in which the horizontal axis is the bottle price in Swedish kronor (10 SEK ≈ $US1), and each vertical stripe represents one retail store. In each case, the arrow highlights the Systembolaget price.

I chose six wines for my main comparison — an EU wine and an imported wine for each of three prices classes.

Trying to do this exercise for cheap wines from Europe is a bit tricky, because they usually come from wine co-operatives, and they are either: available in only a few countries, or are marketed under different names in different countries. So, to start, I simply chose the cheapest bottled white wine in Systembolaget that is also available elsewhere:

Casal Garcia Branco, Vinho Verde, Portugal

The graph shows that there are data for 61 stores (from 19 countries) in the EU, plus 7 stores (from 2 countries) in the EFTA. The Systembolaget price is ranked 26th, a long way from the most expensive price.

An imported cheap wine is a bit easier to find. I simply chose the Australian red wine that I had purchased most recently:

Jacob's Creek Classic Shiraz - Cabernet Sauvignon, South Eastern Australia

There are data for 59 stores (from 17 countries) in the EU, plus 5 stores (from 3 countries) in the EFTA. The Systembolaget price is ranked 33rd, much less than the most expensive prices..

Moving on to a higher priced wine from Europe, I once again simply chose the one that I had purchased most recently:

2006 R. Lopez de Heredia Viña Tondonia 'Viña Bosconia' Reserva, Rioja DOCa, Spain

Here, there are data for 21 stores (from 14 countries) in the EU, plus 2 stores (from 1 country) in the EFTA. The Systembolaget price ranks 2nd, behind a store in Spain itself. This is exactly what I described above for mis-priced wines.

Similarly, for a higher priced imported wine, I simply chose the United States wine that I had purchased most recently:

2016 Michael David Winery 'The Seven Deadly Zins' Zinfandel, Lodi, USA

The issue with this choice of wine is that only two other European countries import it, Denmark and Norway. So, in the top half of the graph I have included prices from all other countries except the USA, which comprises 12 prices (from 7 countries), including Canada, Hong Kong, Japan and Singapore. Note that Systembolaget has the cheapest price of all of these countries.

In this case, we should also compare this wine to the prices in its homeland. The bottom half of the graph shows the prices from 62 stores within the USA itself (there are only 12 distinct prices). In this case, the Systembolaget price is raked 26th. That is, this wine is cheaper in Sweden than half of the US prices! And note, the Systembolaget price includes delivery to my nearest shop, whereas the US prices often exclude delivery — that's not bad, considering the cost of transporting the wine across the Atlantic Ocean. Systembolaget really does sell alcohol without regard to profit motive.

Now, we can move on to even higher price brackets. For an expensive European wine, I simply chose the most expensive wine from my local bottle shop (liquor store / off-licence):

2016 Marchesi Antinori Tignanello Toscana IGT, Tuscany, Italy

There are data for 61 stores (from 23 countries) in the EU, plus 7 stores (from 3 countries) in the EFTA. The Systembolaget price is the cheapest, as expected.

Finally, we come to an expensive imported wine. I chose a United States wine that is available in several European countries (many expensive US wines are available only in the United Kingdom). So, we have:

2016 Sine Qua Non 'Rätsel' Syrah, California, USA

There are data for 14 stores (from 7 countries) in the EU, plus 2 stores (from 3 countries) in the EFTA. The Systembolaget price is easily the cheapest (as shown in the top half of the graph).

In this case, we can also compare the wine to the prices in its homeland. The bottom half of the graph shows the prices from 31 stores in the USA. In this case, the Systembolaget price is ranked 13th. Once again, this wine is cheaper in Sweden than half of the US prices!

So, there you have it — the more expensive the wine then the better is the Systembolaget price compared to elsewhere in Europe, just as I have always believed.

Finally, I decided to go one better than this, and I also looked at 15 older wines that became available in Systembolaget during 2018–2019, which I defined as: >12 vintages old without being the current release. I have included a table of these results below. However, in summary:

• twice, Systembolaget is the only shop listed
• nine times, Systembolaget has the cheapest price
• once, a French wine is cheaper in France than in Systembolaget
• once, an Italian wine is cheaper in Italy than in Systembolaget
• twice, the competing wine prices reported do not include sales tax (usually 20-25%), whereas the Systembolaget price does — allowing for this, the Systembolaget price is cheapest
• the sole US wine is cheaper in Systembolaget than it is in the USA, after allowing for taxes.

Conclusion

So, I feel that I am right — Sweden is the place to be in Europe, if you like fine wines and care about your budget. You could also get your US wines here, even if happen to live in the USA.

How is it happening, then, that the authorities do not know this? I have read and re-read the description of how Eurostat produced their data (I have quoted it at the bottom of this post), and I cannot for the life of me see where they are going wrong. The only possibility that I can see is that beer and / or spirits are muddying the waters, since these are included in their calculations. However, it seems to me that Systembolaget does very well there, too, mainly due to its superior purchasing power.

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Here are the extra 15 wines, listed in vintage order. In each case the store providing the price is listed, along with its location. The prices are in Swedish kronor, with the Systembolaget price highlighted. Those prices that exclude tax are noted.

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Eurostat calculations

Price level indices (PLIs) as presented in this publication are the ratios of PPPs to exchange rates. They provide a measure of the differences in price levels between countries by indicating for a given product group the number of units of common currency needed to buy the same volume of the product group or aggregate in each country. The PLI for a given country is calculated as its purchasing power parity (PPP) divided by its annual average exchange rate to the euro. This implies that exchange rate movements have an impact on the PLIs.

Purchasing power parities (PPPs) are price relatives that show the ratio of the prices in national currencies of the same good or service in different countries. For example, if the price of a hamburger in France is EUR 2.84 and in the United Kingdom it is GBP 2.20, the PPP for hamburgers between France and the United Kingdom is EUR 2.84 to GBP 2.20, or EUR 1.29 to the pound. In other words, for every pound spent on hamburgers in the United Kingdom, EUR 1.29 would have to be spent in France in order to obtain the same quantity and quality – or volume – of hamburgers.