Small change, big difference

How much do you think the average consumer spends on wine? Given that a cinema ticket costs around ?7 and that a 10-minute ride in a London taxi can leave you considering a second mortgage, the answer might surprise you.

As a nation, we are still reluctant to shell out more than ?4 on a bottle of vino. The latest figure, courtesy of analysts AC Nielsen, is ?3.94. The good news is that this is 6p up on 2003's figure and 13p up on 2002's. Given the amount of discounting in our supermarket and off-licence chains, that's an achievement of sorts. Remember that it's an average. For every bottle of Champagne or ?7.99 Shiraz sold, someone is buying something at ?2.99 or less.

What's wrong with cheap wine, you're probably thinking. The UK, being the most competitive market in the world, has a disproportionate amount of drinkable plonk. It's all the more amazing when you realise that duty and VAT account for ?1.77 of a ?2.99 bottle of wine. Add shipping and the retailer's margin, and you're not left with very much for the actual liquid in the bottle.

So it's verging on the miraculous that sub-?3 wines are distinguishable from lighter fuel. There's very little in it for the producer (other than the chance to dump excess stock). The retailer makes a bit of money, but supermarkets tend to think in terms of footfall rather than profit where cheap wines are concerned. Get the punters through the door, then sting them for their groceries.

I am only too aware that not everyone wants to spend more than ?4 on a bottle of wine. After moving house, having my car nicked and receiving a very large bill from the Inland Revenue in the past few months, I'm none too keen to buy expensive wine myself. But I'd still urge you to trade up to ?4.99 or more if you can. The best value for money is to be found between ?5 and ?8, in my view.

It may seem strange for a consumer columnist to urge retailers to increase their prices (and quality), but what we pay does not reflect the true cost of producing wine. It's only because there's a global surplus that the sub-?3 deals can continue. Even then, the countries that produce inexpensive wine tend to have a poor image, a weak currency, cheap labour, or all three. The news that two bankrupt winemakers have committed suicide in Beaujolais in the past month should give us all pause for reflection.

Cheap prices are not sustainable, unless you want to end up buying all your sub-?5 wines from a handful of global suppliers who are happy to play the same game as the supermarkets and off-licence chains, maintaining artificially low prices while the big retailers screw smaller producers to the winery floor. There will be casualties.

There are good wines to be found at under ?4, but it's not as easy as you might think. In Best Cellars, I've listed four that I'd be more than happy to drink. But I had to kiss an awful lot of frogs before I found something resembling a princess.

Best cellars

Four wines under ?4 that you can actually drink

2001 Irsai Oliver, Hilltop Winery (?2.99, Morrison's/Safeway)
You would expect a three-year-old Hungarian wine to be over the hilltop by now, but this is surprisingly sprightly. It's fresh and zesty, with notes of grapes and orange zest. A very acceptable party white.

2003 Gran Garnacha, Cariñena (?2.99, Sainsbury's)
This wine has to be among the best-value sub-?3 reds around: a juicy, gluggable northern Spanish red with lots of perfume and smooth tannins. Better than a lot of Riojas at twice the price or more.

2004 Asda Chilean Carmenère, Central Valley (?3.48, Asda)
Sourced from the ultra-reliable Cono Sur, this is a textbook example of Chile's most unusual red grape. A smoky, fleshy, unoaked red with lots of green pepper and blackberry-fruit flavours.

2003 Adria Beneventano Rosso, Campania (?3.99, Waitrose)
Amazing value from the countryside around Naples, this is a brilliant blend of 80 per cent Sangiovese with the best local grape, Aglianico. It's a perfumed, plummy red with subtle oak, and the guts and concentration to age for a year or two.

tim.atkin@observer.co.uk