RRP $70 for new Penfolds Bin 389

[dave vino]

How many who don't know what good wine costs would pay $70 for something that between 2 people would last about an hour or $15 per 150ml glass when they could have a Koonunga Hill for $15.

I doubt most people would even know how to rank the Bin range from lowest to highest.

So they are not targeting the randoms, they are not targetting the know alls. Who are they targeting apart from China and the IDGAFWIC's?

[Loztralia]

Well yes, except there's no evidence that's happening. Here's my guess: the large majority of people who buy Penfold's bins are fundamentally wine ignorant and do so because they are premium products where "you can't go wrong". These are the people who will pay $70 a bottle. Next are loyalists/completists who might not like the headline price and might seek the best available discount, but will buy anyway. Next come people who will only buy when they see a really good discount and believe it's a really good wine this year. Finally come the people who say the whole thing is too expensive and don't buy at all.

The trick for a business is to maximise the price the non-discriminatory audience will pay without losing too many of the lesser categories and being able to clear stock at the highest mean price. That's why they discount for very early or very late buyers. Now this may shock you but I have an economics degree (well actually philosophy, politics and economic but what's triple honours between internet insults?), so I can exclusively reveal that this is called "price discrimination". It's what airlines do, for instance. Do you look up the cost of a flight from Auckland to Sydney leaving tomorrow and claim Air New Zealand have "lost the plot" because it's twice what you paid last time? No, you call yourself an idiot for not booking earlier. You know Penfold's bins are going to be discounted, yet you still complain about a headline price you are never going to pay.

Plenty of evidence it happens I can assure you but I don't want to argue about it. I can only imagine how much pressure it would be to win an argument as a triple honours student. You could lose sleep with all the counter arguments running through your head. Personally I have had only seven years experience leading price rise processes it myself and analysing its results another similar corporate. But that is only the real world, nothing quite as good as the classroom. Ok theres the jab but nothing personal ok...im ducking for cover. Now for my diplomatic side....

Wine does however have the advantage (or disadvantage) that supply is limited and really if you sell out a vintage before the next one is released you could argue you are too cheap? It also has a reasonably long shelf life so lots of time to assess and react.

I like your discounting on the way in and out comments. Makes a lot of sense. And yes a good comparison made to airlines. Headline price is also used for other purposes to do with Trade Marketing especially to supermarkets. Dear Mr woolies, yes price has gone up to $70 but I tell you what we will promote with you and fund you down to $50, you will be heros". We will pay you $20k also to put a big 1 page glossy ad in your mailer too. Then we will just write you out a rebate cheque for $20* bottles scanned over 2 weeks from launch. Again it wont impress mr and mrs corner wine shop owner but "makes sense"

However, back to the essense of forums, it is fair enough for us to rant about not getting our favourite wines as cheaply as we once did. As you have noted, happens every year and will continue to. Can't let these shareholders get too fat and make it too comfy for them Or maybe I should just buy shares?

I've also worked in the City of London and written for/edited financial markets publications for 12 years so, yeah, not all classroom you know. Anyway, I hate arguing with people on the internet for innumerable reasons and you're a much better contributor to this forum than I am so let's 'shake' on this and move on, yeah?

I guess my last comment is that if this strategy doesn't work eventually the price will fall. Till then I'll keep buying, I dunno, Vasse Felix.

[bacchaebabe]

Yeah, but has anyone tasted it?

I'll pay what I did last year (about $38) or a little more if it's any good.

I usually get a six pack each year at the discount rates. I pass if I can't though.

[Michael McNally]

Surprise, surprise. The Bin 389 is availble for $50p/b in any six. The Bins 28, 128 and 138 at $25.

Now to see what they taste like!

Cheers

Michael

[Craig(NZ)]

Looks like it isnt just consumers hitting back. This from one of NZ's largest fine wine retailers..

[phillisc]

Hey Craig, any chance or indication with what wines are on page 14?

Cheers Craig

[Craig(NZ)]

two hands angels share shiraz, first drop mothers milk shirz, thorn clark shotfire shiraz, yalumba signature, yalumba the menzies

[daver6]

Just stuck my head in at the local DMs (roughly 1630 Perth time). Chatting to the lady running that tastings. Apparently they haven't sold a single bottle of the new releases yet as opposed to last year where she claimed they had gone through half their stock.

[rens]

Surprise, surprise. The Bin 389 is availble for $50p/b in any six. The Bins 28, 128 and 138 at $25.

Now to see what they taste like!

Cheers

Michael

Hi Michael
I'd love to know your thoughts on the line up.
Did Graham mention how much they had moved (assuming you went there)?
I'm going up before the game tomorrow, but would still like to hear what you thought.

[Sean]

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[ticklenow1]

Thanks for the notes Sean. I might head down to the devil's chain store and give them a try on Saturday. I'll probably just buy a couple of Bin 138's (if any) to be honest.

As for the price rises, if the wine is not worth it, don't buy it. I guess this is one good point about the bins, they are always on tasting when released so they can be assessed by many. It will be interesting to see the ratings from the critics. No doubt they will be stupidly high again. I remember J. Oliver getting flack when he panned the 2000 Grange. No critic ever seems to criticize Penfolds. It's almost like it's not allowed. I am not saying they make poor wine, they don't and I've had some stunners over the years, but they seem to be immune to critisism these days.

Ian

[Craig(NZ)]

I've also worked in the City of London and written for/edited financial markets publications for 12 years so, yeah, not all classroom you know. Anyway, I hate arguing with people on the internet for innumerable reasons and you're a much better contributor to this forum than I am so let's 'shake' on this and move on, yeah?

Nothing wrong with having different opinions and presenting points of view. Definitely no harm done in my opinion. Im no better contribultor just been here longer. Maybe here longer only because I refuse to take offense and Gavin is a forgiving guy when we step over the line and start hurling haha

[Craig(NZ)]

Decanter Magazine wading in....

http://www.decanter.com/news/wine-news/529785/penfolds-outrages-merchants-with-slap-in-the-face-price-hikes

[TiggerK]

Just found DM's having them on tasting instore. Bottles opened yesterday. Brief thoughts, FWIW.

Bin 28 2009 - big Penfolds style, lots of everything inc oak. OK, but a bit bloated. Would likely have loved this style 10 years ago!
Bin 128 2010 - So different to 28, cooler climate style, younger of course, and always needs a year or three to get started. Not bad, should be better with time.
BIn 138 2010 - I see the attraction for many, decent balance and more interest than the 128, but plenty of better blends at or below this price point, Teusner etc.
Bin 407 2009 - good cab fruit, medium body and length, hint of green, should age nicely and hopefully develop some complexity. Would have liked a bit more to think about. Again though, not great value at $43.
Bin 389 2009 - Enjoyed it, good long length and interesting array of flavours. Could only bring myself to buy one @$49 to continue the cellar vertical, but may well get a couple more some day, ideally below this price if poss.

They weren't selling much!! So Penfolds reckon they have such demand around the world that they can justify raising prices?? Good luck to them if so.

Cheers
TiggerK

[Thommo]

I reckon the bin 51 is the unsung hero of Penfolds' bin range. I haven't tried the new release yet, but I generally buy a bottle or 2 of it each year. Often hard to come by though.

[Chuck]

The 389 used to be aged in barrels that held Grange, hence its nicknames of poor man's Grange and baby Grange. I hope at current prices they use some new oak

[Jay60A]

You haven't even considered internationally where the 389 does NOT have the same reputation. Its floundering in the US, even at $35. This used to be a 20 or sub 20 dollar wine..why would people pay 35? Or 50 in some cases? they don't. Will they pay 5 dollars more now? Hardly...

Or countries like Canada where the price is hard set by the government..or states in the US where the bottle shops are state owned..those prices are all set and not discountable... Or consider Europe where they have far more general knowledge about wine. At 30 EUR are they going to buy a 389? What for? The answer to that is simply no. Or the people in the UK who aren't buying it anymore either..and certainly won't with a price increase. None of these markets have rich people or loyalists that will pay for a premium for a 389 because for them, it's cheap wine from Australia.

Always love the annual Penfolds frenzy ... Being in London, I agree 100%. I'm neither poor nor an (over-)loyalist. I suspect a shift of markets - off license in Europe and US, and expansion into Asia in general?
Does anyone know where Penfolds shifts 389 now geographically and in market segmentation? It used to be a staple in the UK incl supermarkers and Oddbins, no more.
For the record my last primary purchases were St Henri 2004, & the Cellar Reserve Cab/Shiraz & Barossa Cabernets 2005 - all at overseas prices.

I'd be interested in where the grapes come from in the new 389 btw. A lot more old vine material in 1996 and 1998 methinks, especially with no RWT in 1996! ...

[Sean]

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[Sean]

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[phillisc]

Glad to hear that you are not poor Jay!

[Sean]

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[TiggerK]

Heard the same comment from the DM lady about their allocations.... And I can't help but be cynical and think that the limited numbers of 407 released to Oz markets are just to create a sense of 'quick, buy now before it's all gone, yep sorry it's a bit pricey, but look, isn't it rare!'

Feeling a bit of overall brand 'meh' after this whole new release episode, wonder if others are now feeling more negative towards our famous Oz brand.

[ticklenow1]

Heard the same comment from the DM lady about their allocations.... And I can't help but be cynical and think that the limited numbers of 407 released to Oz markets are just to create a sense of 'quick, buy now before it's all gone, yep sorry it's a bit pricey, but look, isn't it rare!'

Feeling a bit of overall brand 'meh' after this whole new release episode, wonder if others are now feeling more negative towards our famous Oz brand.

I have to say that I am feeling a little the same. Had a taste and it has to be said...there is better value to be had with others. For the money they are asking, the quality elsewhere is streets ahead as well. They are decent wines, no doubt, but I didn't buy any. If they get down in price a little, I may look at the Bin 138, but that's about it. When you can get the Teusner Riebke for $17 a bottle (along with many others at a similar or slightly higher price point), Bin 28 and 128 are not getting into my cellar. I think the Koonunga Hill 76 Shiraz Cabernet offers better value than the Bins if you really want to buy Penfolds. I have had several old Bins over the years and a few have been stunning while some have been so so.

I'm not really worried by the price rises as I said earlier. If they are not worth it, don't buy. Simple really. Penfolds will soon discover that sales are down (and their reputation suffering) and adjust accordingly.

My 2 cents...
Ian

[Michael McNally]

I agree that the quality of the latest release is not quite at the same level as last year's.

I found the Bin 138 the pick of the crop yesterday. It is the most complete of the 'lesser' bins with polished black cherry and dark chocolate. Right in my 'darker/fuller' GSM sweet spot. The Bin 128 does have savoury morish acid and will probably have a better short to medium term future than the Bin 28. I like others didn't get the big step up in quality for the Bin 389, though it was a little closed. I agree the Bin 407 is the pick of the bins, though at $45 my Coonawarra Cabernet will come from elsewhere.

As for the 2009 Penfolds Kalimna Bin 28 Shiraz, I often buy 6 of these so I bought a single bottle to take home and road test. It was the most mouth-filling of the Bins at the tasting. Has a raspberry/blackcurrrant nose. Solid 'Kalimna' (it annoys me that it is a style rather than a place - though I digress) characteristics though possibly lacking a little in the black pepper/chinese all-spice department. Plenty of black fruit on that palate and the 'oyster sauce' descriptor from the tasting notes is spot on. Traditional maltiness to the oak at the finish though not over the top oak-wise. The lack of prominent tannin suggests this will be a medium-term cellaring prospect (though what would I know!). Will try the leftovers tonight before deciding whether to buy, though at $25 I would be buying more out of 'tradition' than from a 'value' perspective.

Cheers

Michael

[Rossco]

yeah their strategy is interesting one.

With these price hikes and the release of Bin 620, to me, it looks like they are pinning all their hopes on china and stuff the rest of the world.....lets hope the @$$ doesnt fall out of
China like it did the US/Europe.

While I have seen the increase in price / decrease in value occur over the past 3-5 years, whats most disappointing is they have effectively alienated themselves from the rest of the Australian market.....you remember that market TWE dont you..... no........... oh my apologies.

I wonder if they paid their contract growers 50% extra?

By all accounts, if they jack up the price by 50% and only lose 40% sales, they are still in front (assuming they maintain that price strategy...which is doubtful) and will probably drip feed the market over the next
few years with special "Aged Releases"

Interesting to hear about the number of 407's vs 389's

[Craig(NZ)]

Yesterday at the supermarket I see

2009 Penfolds Bin 28 $38
2010 Church Rd Reserve Syrah on special for $30 down from $38

How much of a buying decision would you need there!??? One fine flagship Hawkes Bay Syrah vs One Marketing dept that thinks too much of itself

[Sean]

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[Rossco]

I am wondering if the RRP’s this year are a payback by TWE for the heavy discounting done by the big chain stores last year. TWE want to protect the brand (especially now perhaps) and have effectively forced the retailers to lift their prices. Might work or might not.

or just a method to recover their substantial de-merger costs.

While i dont feel sorry for the big retailers, its the little retailers & independents who will be the hardest hit out this mess.

[Craig(NZ)]

I am wondering if the RRP’s this year are a payback by TWE for the heavy discounting done by the big chain stores last year. TWE want to protect the brand (especially now perhaps) and have effectively forced the retailers to lift their prices. Might work or might not.

I can assure you that deep cut funding is done hand in hand with the supplier. The supplier will fun a good chunk of the reduction

[phillisc]

I am wondering if the RRP’s this year are a payback by TWE for the heavy discounting done by the big chain stores last year. TWE want to protect the brand (especially now perhaps) and have effectively forced the retailers to lift their prices. Might work or might not.

or just a method to recover their substantial de-merger costs.

While i dont feel sorry for the big retailers, its the little retailers & independents who will be the hardest hit out this mess.

Or indeed Sean and Rossco, the 15% executive pay demands/increases so they can justify to shareholders..."look what a great job we have done...the Asian market has bought 3 cases of 620, but the Australian market has all gone.........far.............far...............away".

Bit like a certain airline CEO stating that grounding the planes was a good thing....what did he all expect us to do....walk on water...bit like the Pennies marketing strategy.
Just hoping and praying that WCE does not get the same treatment dished out to them come Wynnsday from the clueless boffins at Southbank.

Cheers Craig