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What The Market Says
The Battle for the Penfolds Dollar
Monday, 21st March, 2011  - David Farmer

Early March is when Penfolds release the new vintages of the famous Bin Number reds.

Ever since Woolworths and Coles came to dominate the wine market the release has created a marketing nightmare for the owners, and this year it's Treasury Wine Estates (Fosters Wines) turn. Instead of being a moment of triumph and a reflection on those who created the Bin's it requires the utmost diplomacy and tactical skill to make sure the supermarkets do not turn it into a bitter war as to which can best trash the brand by being the cheapest.

Fortunately for consumers the diplomatic skills have not worked for as far back as I can recall. No more than a few days go by before the big two turn the release into a slanging match. This has become exciting sport for observers like me.

With the diplomatic work completed and assurances given, the week started quietly with 1st Choice (Coles) announcing on the 3rd March that 'We Beat Everyone's prices on Penfolds Wines' followed by a description of three wines with no prices posted.

Dan Murphy's (Woolworths) opened gently with 'Penfolds Bin Release Out Now', and described in great detail six wines with an in-house score, again with no prices:

Penfolds Bin 128 2009 90/100
Penfolds Bin 28 2008 95/100
Penfolds 407 2008 94/100
Penfolds 389 2008 94/100
Penfolds 138 2009 96/100
Penfolds 150 2008 94/100

These scores show five gold medal wines out of six which must place a smile on the face of Peter Gago the Chief of the Penfolds winemakers.

I have been told the combustion to this year's truce was a press advertisement, or an in store bill board, by a Vintage Cellars (Coles) in Melbourne which showed how cheap the prices would be for members when they added back 'cellar reward points', a bonus Vintage Cellars accumulates for customers. The prices started at $23.99 for the lower bin numbers and thus became much cheaper with the additional savings.

This was too much for Dan Murphy's who answered with a full page advertisement in the Sydney Morning Herald, on the 4th, and charged out at $18.70 for the lower Bin numbers. Gold medal scores be dammed it's the price that counts. 1st Choice had to respond and by the weekend Sydney prices were at $17.40 with Bin 389 being at $42.99 which is over $6.00 a bottle cheaper than your local independent pays to buy it, not to sell it. Independent store owners of course wait and head down to Dan's to pick up a few cases.

If all of this strikes you as a tad ridiculous you may be right though the consumer benefit is obvious. "Buy Now" is the message.

There is another angle to this story that you may also enjoy.

The Dan Murphy appraisal of the new Penfolds release was written by and featured Andrew Caillard M.W. and the sub-heading about the vintage said 'one of the best in a decade'.

The introduction read; "As a Master of Wine - one of the wine industry's highest professional qualifications – Andrew Caillard is a highly regarded authority on Australian wine and recent winner of the prestigious Australian Wine Communicator of the Year award. A veteran wine auctioneer with Langton's and widely published, including a regular column in Australia's Gourmet Traveller Wine, Andrew is also the author of the classic collectors bible Penfolds: The Rewards of Patience and a co-author of A Taste of the World of Wine – an academic text for first year university students."

What it did not say is that Langtons, the wine auction house, is owned by Woolworths and by far the most significant earner for that group is trading in Penfolds reds. Andrew, as stated is the editor and writer of 'Penfolds - The Rewards of Patience'. Now an impartial observer may make the point that the scores given, and the glowing descriptions of the Penfolds wines, as featured in your employer's advertising, could have been influenced by this association.

I cannot offer an opinion as I have not tried the wines though I do recall that 2008 across South Australia was the year of terrible heat waves.

Before Christmas I heard Andrew talk at a function in the Barossa about 'future directions for the Barossa' and he began with a glowing review of the Woolworths family of businesses which had no relevance and in my opinion was inappropriate for the occasion. I have been told when accepting the 'prestigious Australian Wine Communicator of the Year', in February, Andrew was at it again with more effusive praise for Woolworths.

This does make me wonder.

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