Fans of Penfolds wines face rising prices, reduced supplies...

Fans of Penfolds wines face rising prices, reduced supplies

Milly Cottrell, from Penfolds, with the new Grange and Bin 389. Pic: Calum Robertson

• ELI GREENBLAT
• The Australian
• 2:50PM October 23, 2017
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It’s not just households facing bill shock when they open their latest electricity or gas bills.

Quaffers, drinkers and collectors of the iconic Penfolds Grange collection are being forced to swallow steadily increasing prices to secure a bottle of favourite Penfolds brand, as they compete with insatiable demand from China and other keen buyers overseas.

And in what might send shockwaves through Penfolds’ Australian fanbase, it appears the allocation of the iconic Grange has been tilted further to Asia’s favour, possibly reducing the supply to local markets.

Last week Penfolds released its 2017 Bin collection, including the 63rd consecutive release of the powerhouse flagship Grange, with prices generally increasing across the board for the labels sold alongside the Grange such as St Henri Shiraz and Bin 398.



It comes as Treasury Wine Estates, the winemaker that owns Penfolds as well as a weighty portfolio of other brands such as Wolf Blass, Saltram and Pepperjack, is flooded with huge demand from Asia, and especially China, where consumers are begging for more Penfolds Grange at the expense of sales to Australia, North America and Europe.

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This has helped sustain and bolster Penfolds prices, while Treasury Wine Estates is also focusing on the needs of its shareholders by improving margins and ratcheting up the prices for its highly anticipated annual Penfolds release.

Deutsche Bank analyst Michael Simotas said the latest 2017 Bin release has ushered in numerous price rises.

“The Penfolds 2017 Bin collection has been released, this release mainly uses fruit from 2014 and 2015 vintages.

“Prices have generally increased from the October 2016 release with the exception of Grange, which remained at $850. St Henri Shiraz saw the highest increasing from $100 to $125 and the important Bin 389 saw price increase for the 2nd consecutive year,’’ Mr Simotas said in a note to his clients.


“This year’s Penfolds release has shown solid price increases, particularly given important wines like Bin 389 have seen prices increased for the 2nd consecutive year and St Henri saw a large 25 per cent price increase.

“While sell-through is obviously important, we believe the ability to take price is a function of management’s strategy of allocating more wine to more profitable markets (ie Asia). Discounts at the major retailers have been consistent with last year but bottle limits have been more restrictive, which we believe is probably reflective of the reduced allocation to Australia.’’

Mr Simotas said retailers have continued to discount as drinkers rush the shops to get a bottle of their favourite Penfolds.

“As usual, big box retailers and some independents have been discounting Penfolds. Generally the discounts have been consistent with recent years (15-25 per cent). Customer bottle limits are more restrictive this year (eg Bin 389 24 bottles vs. no limit last year).

Mr Simotas sees the launch of the $3000-a-bottle g3 Penfolds blend as “marketing activity”, as only 1200 bottles were produced.

Interestingly, and underlining the growing importance of Chinese consumers, the g3 label was officially launched in Hong Kong by Penfolds chief winemaker Peter Gago.