'Why don't you ever write about cheap wines?' an impecunious friend asked me recently. 'It's all right for buffs to spend £9.99, but what about those of us who just want something cheap and drinkable for dinner?' A fair point, I suppose. I tend to spend a greater percentage of my income on wine than I do on, say, clubbing or Class A drugs, but I'm aware that not everyone shares my sense of priorities.

So this month I'm going to write about wines under a fiver, partly as an antidote to what the jet set are up to elsewhere in the magazine. As such, I'm reflecting the preferences of the general public (though not necessarily OFM readers, who are people of great taste and sophistication). The average price of a bottle of wine in the UK is still some way below £4 (around £3.80 the last time I asked a statistician). And if that's the average price, there must be a huge tranche of consumers who never spend more than £2.99 on wine. I hope they've got good dentists.

But let's start with a question. How cheap is cheap? The bottom of the barrel, at least as far as I'm concerned, is to be found in German discount stores. I wandered into one of these places last year and was shocked by what I saw: a place that made KwikSave look like the Selfridges Food Hall. The wine 'selection' was pretty meagre, but the prices were some of the lowest I've ever seen. Something called 'Le Rouge' was on sale at the equivalent of 65p. That was per litre, by the way. And a wine from Bordeaux, a region that includes some of the most prestigious chteaux in France, was on the shelf at £1.30. Who cares if both wines are vile? They're alcoholic and, in theory at least, made from grapes.

Why don't we see similar deals here, some of you may be wondering? The answer is excise duty, which, as of the recent Budget, stands at £1.22 a bottle for table wines, roughly £1.20 higher than in France. I sometimes wonder if the Treasury has shares in the Calais Tourist Board, because it continues to do a fantastic job of encouraging punters to buy wine on the other side of the Channel.

We hardly, if ever, see wines at less than £2 here. In fact, the £2.99 bottle may well be an endangered species. If so, then I'll be the first to applaud its demise, because it is not economically viable to produce wine at that price. I've always found it ironic that people who champion ethically sourced coffee, tea or clothing are more than happy to buy wine that costs £2.99 or less. Take it from me: the poor sods who produce it are getting screwed by the retailer, whether they live in Italy, France, Argentina or South Africa. Either that or they are deliberately selling wine at a loss to free up some tank space before the next harvest.

I know I'm supposed to be writing about the bargain basement, but my advice is to trade up whenever you can, and not only for altruistic reasons. Duty, transport and distribution are fixed costs, so the more you spend, the more wine you get for your money.

To prove my point, I asked a buyer at Majestic to estimate how much of a £2.99, £3.99, £4.99 and £9.99 purchase goes towards the liquid in the bottle, once VAT, packaging, the retailer's margin and all the fixed costs have been taken into account. His answers may give the bargain hunters among you pause for thought: 45p, 85p, £1.30 and £4.30 respectively (or 15%, 21%, 26% and 43% of the total price). I reckon that's a pretty strong argument for spending more on a bottle of wine. Or, if you prefer, for taking a day trip to Calais.

Best wines for under a fiver

Argentinian Malbec (£3.74, Asda)

Sourced from the excellent La Riojana co-operative, this is Malbec in its pure, unoaked state. It's soft, juicy and easy to drink, with bright plum and raspberry fruit flavours and good colour in the glass.

Gaston de Veau Colombard/ Sauvignon Blanc (£3.99, Marks & Spencer)

Another topnotch co-operative, this time Plaimont in Gascony, an operation that specialises in fruity whites such as this fresh, unoaked, almost crunchy blend of Colombard and 40 per cent Sauvignon Blanc.

2002 Casillero del Diablo Cabernet Sauvignon (£3.99, Waitrose, Threshers, Tesco)

A wine that is ludicrously underpriced in my view, so make sure you snap up a few bottles before someone puts the price up. This is firm and smoky, with a good backbone, toasty American oak and piercing cassis fruit.

2002 Vin Five Semillon/ Chardonnay, Western Australia (£4.49, Threshers)

It's getting harder and harder to find half-decent Aussie whites under £5, so take a bow, Threshers, for listing this intense, herbal, refreshingly framed blend with its palate-tingling acidity and core of tropical fruit.

2003 Chteau Guiot, Costières de Nîmes (£4.99, Majestic; £1 off two bottles)

A winning blend of Grenache and Syrah sourced from one of the best appellations in France for bargain hunters. Aromas of blackberry and liquorice give way to an elegant, pleasantly peppery palate. This is at its best with food.

My best buy 2002 Montalto Sangiovese/ Nero d'Avola (£4.99, Safeway)

The screwcap revolution is beginning to catch on in Sicily, which has to be good news for anyone who's fed up with the inconsistency of cheap corks. This is a lovely wine, with ripe, spicy Mediterranean flavours, firm tannins and a kiss of oak.