Basically it boils down (no pun intended!) to the sugar source to make the ethanol needing to be cheap. In Brazil (biggest ethanol producer in the world and I think the biggest sugar producer) they have very cheap sugar. The commercial process involves squeezing the juice from the sugar cane and then simply fermenting the juice - the distillation removes the alcohol from the impurities and most of the water.
The sugar you're buying in the shop is made from the same juice but the juice is purified, concentrated, crystallised, separated and dried - each step involving energy (= cost). That sugar is then transported to port and then by ship to the UK, where it is bagged and distributed... all adding cost.
IIRC you will need more than a kg of sugar (1.1-1.2kg?) to produce 1 l of ethanol (dunno what a kg of sugar costs?) plus the costs of your fermentation equipment and the energy to distill.
I'm a bit rusty on the details and it's getting late - as a rough guide I believe Brazilian ethanol costs about $0.25/l to produce, whereas petrol costs about double that (Obviously this depends on the current price of crude etc - taxes then go on top to get the price we see at the pump) so Brazilian ethanol is much cheaper than petrol hence the big ethanol component in their petrol at the pump.
Just to make this worse, the ethanol needs to be around 30% cheaper to be equivalent to petrol because its energy density is lower, i.e. you consume 25-30% more ethanol to produce the same power as petrol!
I feel like I need to drink some ethanol after waking up some braincells that have been in long hibernation
Cheers,