RRP $70 for new Penfolds Bin 389

[sjw_11]

hey, thought you might all be interested in the official TWE response to those having an issue with the price hikes:

From their Investor Relations team, regarding press reports that some retailers won't take their allocation of the new Bin vintage because of the price hikes:

Whilst there has been some negative press about the price rises TWE said demand will still outweigh supply.
TWE has implemented a 'dual release programme' for it's luxury wines. Meaning part of the vintage is released in March and the remainder kept available for key release periods (i.e. Christmas, Chinese New Year etc) as opposed to the past where they have all been released March. This helps on two fronts, i) greater pricing power for TWE at the release in March because of the lower volume released and ii) releasing the remainder at times of high demand means less of the vintage will be sold on discount.

[Craig(NZ)]

Well if they are right and the market is up there in the sky then good on them but I seriously doubt that I will ever buy another Penfolds wine. I usually buy the odd Bin 28 when it is $18 a botttle in the supermarket. The last time I bought 389 was when it was $25 at the supermarket for the 2004 (bought a truckload).

The good deal around here at the mo is the 2005 Cellar Reserve Shiraz Cab which is $90-95. Next to the latest 389 prices it seems a good idea?!

Off the back of this the next moot point is what will the relase prices be of 707, St Henri, RWT, Yattarna and Grange?

[TiggerK]

As much as I enjoy aged St Henri and 707, no doubt the prices will skyrocket further into the ionosphere, putting them even further off my radar.. When budget allows, stock up on St Henri 04's now I say!!

Saw this comment on another wine site...

"Oh yeah one last thing, if you think the latest Bin range had a big price hike, you’re in for a shock when the new 707 is released this year."

Let's guess... RRP's - I'll take $120 for St Henri and $240 for 707. (up from $90 and $190 respectively).

Got to wait until late April to find out though...

[Polymer]

Well if they are right and the market is up there in the sky then good on them but I seriously doubt that I will ever buy another Penfolds wine. I usually buy the odd Bin 28 when it is $18 a botttle in the supermarket. The last time I bought 389 was when it was $25 at the supermarket for the 2004 (bought a truckload).

The good deal around here at the mo is the 2005 Cellar Reserve Shiraz Cab which is $90-95. Next to the latest 389 prices it seems a good idea?!

Off the back of this the next moot point is what will the relase prices be of 707, St Henri, RWT, Yattarna and Grange?

They might be right..but TWE isn't exactly well managed. There is a reason they were spun off..there is a reason it is valued at about 1/3 of what it was before...

It could be Penfolds is holding up the entire thing....but they're completely overestimating what people think of their wine. The only market they might do very well in is China....They have a good name there and the market is still very immature...and what drives wine there is less the quality and more the brand (at least for now).

[n4sir]

As much as I enjoy aged St Henri and 707, no doubt the prices will skyrocket further into the ionosphere, putting them even further off my radar.. When budget allows, stock up on St Henri 04's now I say!!

Saw this comment on another wine site...

"Oh yeah one last thing, if you think the latest Bin range had a big price hike, you’re in for a shock when the new 707 is released this year."

Let's guess... RRP's - I'll take $120 for St Henri and $240 for 707. (up from $90 and $190 respectively).

Got to wait until late April to find out though...

I can tell you right now RRP for Bin 707 will jump to AUD$250 in May - that's what was said anyway to a couple of Asian groups at Penfolds CD the other day who were trying unsuccessfully to talk the price down from $199. They also mentioned at some places in Asia Bin 707 was selling for $1000/bottle - love to know where!

After hearing that and seeing the increase in (even the street price) of the Bins, I think you could safely bet on an attempt at something like a 25% increase right across the board this year.

They might be right..but TWE isn't exactly well managed. There is a reason they were spun off..there is a reason it is valued at about 1/3 of what it was before...

It could be Penfolds is holding up the entire thing....

I've heard in various circles this is the case - a few years ago when Fosters were attempting to sell off various wine assets Penfolds was the only one many buyers were seriously interested in, and the last one they wanted to part with.

Cheers,
Ian

[newworld]

A worker in the big wine supermarket said 50% of their sales are in Australia. I'm sure the views on here represent those of many serious wine drinkers in Oz. I think Penfold's have got some thinking to do about their pricing strategy.

Anyway, if you believe Halliday, the likes of Bin 28 are on roughly the same level as Mike Press shiraz/cab, Cimicky Trumps, Musician, Pepperjack, Riebke, Wynns basic/Black Label, Yalumba Scribbler, Church Block, Shotfire Ridge, Chalambar, Leasingham Bins, Kirrihill, Tahbilk, Ingoldby, etc, etc, etc.

As the above can easily be bought for around $15 on special, Penfolds Bins are clearly overpriced. I just don't think their 'premium' tag can persuade most ordinary wine drinkers to pay double just for that red brand name on the bottle.

How long before Penfold's prices dip back down to a more reasonable level (~$20)?

I think it's just a matter of time.

[crusty2]

Just another thought. If the RRP prices are high and stock is being held back then the theoretical value of the company, including stock, is higher.
Ideal time to sell while the "books" are at an all time high.
Staff at TWE have previously been asked how is your Mandarin.
With Packer buying in maybe something is closer to happening.

[Sean]

deleted

[sjw_11]

Stock is carried at the lower of cost and net realisable value so lifting the RRP would not change the net assets of the company (i.e. the "books").

[Jay60A]

Stock is carried at the lower of cost and net realisable value so lifting the RRP would not change the net assets of the company (i.e. the "books").

Assets and inventory can both be revalued, although that's more normal for assets.
External market valuation assesses the balance sheet but also expected profitability so there's no need to increase the balance sheet value of stock dubiously, just to demonstrate they can shift volumes at a higher price point and hence profit in the long term.

It's the ability to move stock at higher margins that will up the value but doing that long term requires a superior product - the market will equalise given time ... unless the Penfolds brand itself has inherent value which is what we are basically all assessing in this thread.

My 2 cents ...

[sjw_11]

Stock is carried at the lower of cost and net realisable value so lifting the RRP would not change the net assets of the company (i.e. the "books").

Assets and inventory can both be revalued, although that's more normal for assets.

My 2 cents ...

Under Australian Accounting Standards, inventories (stock you hold for sale in your normal business operations) must be carried at the lower of cost and net realisable value. They are not revalued based on external market valuations unless the net realisable value (i.e. what you can sell it for less costs to sell) falls below your cost.

Inventories can only ever be written down, not up.

http://www.aasb.gov.au/admin/file/conte ... _01-09.pdf

[underwraps50]

It is disappointing to see this happening to Penfolds products. Up here in the sticks where variety and good advice were traditionally hard to come by, it was always an easy decision to buy the latest Penfolds releases and just put them down for varying periods. In the past I have been a big supporter of all the different products from Grange down. During the last couple of decades I have been dropping a couple of wines every year to the extent that I no longer buy any due to their lack of competitiveness at the various price points. I did the tasting at DMs last weekend - all good wines but not for me at the prices. Thanks for the memories...

[n4sir]

I don't think they're selling somehow...

Got an email from the Kalimna Club yesterday opening with:

"We write to you today as market forces have pushed prices lower than Penfolds expected or desired for our 2012 Penfolds Bin Release, however this is unfortunately out of our control."

... followed by the new club discounted prices (which still happen to be more than the big grocers' street price).

Too bad for the Lemmings who jumped in and bought earlier, although I doubt there would have been too many willing to pay 22%-27% more than last year. What on earth did they expect?

Cheers,
Ian

[DJ]

I only just remember what happened to Wynns John Riddoch and Michael with the 96 or was it 97 vintage - tried a massive increase in price - sat on the floor of shops with allocations for months. Very unhappy customers when the price went down again 6 to 12 months later - I know I have only bought 2 bottles since and that was the 2005 (daughter's birth year) but certainly from something I collected to something I ignore. I can't help that think that they have now done the same things with Penfolds, Plenty of Australians know we have been pay higher prices that OS and not entirely due to our taxes.

The first bottle of wine I bought (at 17 oops) was a 389. Now 24 years later I am wondering if I have bought my last Penfolds. Rawson's Retreat and Thomas Hyland have never been on my radar. So many wines which are old staples have stayed much the same price or dropped over the years, Houghtons, Peter Lehmann Barossa, Taylors Clare, ...

Penfolds Bin range are multi regional blends, it is not like they are restricted to a single vineyard site or even region which can't get bigger. I can only presume that the restriction of supply is a tactic to maintain prices when they have stuffed the rest of the portfolio.

Gee what a rant. Remembering retail days with cases of the once desired Wynns just sitting on the floor months, clearly set me off.

[n4sir]

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

A few people were shocked last weekend when I said it doesn't deserve those nicknames anymore. Not so much to do with the price, more so that when it got them there was no RWT, no Magill Estate, no Bin 150 Marananga, no Cellar Reserve Barossa Cabernet Sauvignon and (at the time) quite possibly no Bin 707 either!

For the unfamiliar, after an initial run from 1964-69 Penfolds Bin 707 was stopped because the quantity and quality of the Block 42 Cabernet Sauvignon wasn't consistent enough, and it was decided that what there was should be allocated to Bin 389 which was at the time more successful! (source: Penfolds Rewards of Patience 4th Edition)

So for at least some of the time when these nicknames started in the sixties/seventies (1960-1963, 1970-1975) I would guess Bin 389 could have been considered as high as third (after St. Henri) and maybe even second in the Penfolds tree to Grange! Clearly not the case these days.

Cheers,
Ian

[Mahmoud Ali]

Lots of points being made and I'm glad to read them. I don't live in Australia so I'm not conversant on the annual Penfold's release prices and the subsequent discounting.

What I will say is this, in Canada the provinces that have government retail outlets the prices are not arbitrarily "fixed" but rather marked up according to a set percentage based on wholesale cost, as set by Penfold's and their agents.

I never get wrapped up with verticals, there are far too many wines out there and I don't have enough money and storage space.

Bin 389's age very well and I have been content to sit on my '96s, until they appeared on sale for $24.99 at a local retailer in Edmonton. I bought a few bottles of the '02, '04, and '05. My guess is they'll never approach the level of drinkabilty of the '96.

One point I'd like to make about the comments on the quality and reputation of the Bin 389. If I'm correct the latest Langton's catelogue has the wine ranked, according to auction results, in the second tier of quality Australian wine.

About the Bin 620. I'd never heard of this release when I spotted them at Sydney airport in January. I think it was selling for $800, and I was told that it was first released/launched in China.

Not trying to help Penfold's but the saleman said that Peter Gago told him that the '08 Bin 389 was perhaps the best one in over a decade.

Cheers..........Mahmoud.

[fluba]

But who really pays $70 for 389? I certainly did not when I bought my annual half dozen from DMs. It is a great wine with a great providence and ages beautifully. Yes I am a fan.

[newworld]

Bin 128 is less than $20 in the UK. That's a long way to ship a bottle of wine. Surely the taxes here are not $5 more than the combined taxes and shipping costs to get it to Blighty?!!!!

http://www.tesco.com/wine/product/detai ... =258411815

[Craig(NZ)]

An apt quote which perhaps Penfolds is relying on being accurate

"Beware we you are surrounded by idiots and they outnumber you vastly"

[daz]

Bloody ridiculous! Aussies already subsidise any and everything exported from here.

[Ddavew]

I think penfolds are trying earn more profits, not only from Australia, my guess is china!! very high demands for the past years.

[n4sir]

Jeff Poole has had another crack at Treasury from over the Tasman about their pricing:

New Zealand wine drinkers get 'slap in the face'
By Jo Burzynska for NZ Herald
Thursday Apr 12, 2011

http://www.nzherald.co.nz/lifestyle/new ... d=10798070

"A slap in the face for loyal New Zealand customers," is how Jeff Poole of the Fine Wine Delivery Company described the price hikes of the recently released Penfolds Bin range. It's a move that means for the first time in 15 years, Poole will not be promoting the wines and highlights the issue of wine pricing at a time where more wines than ever are being priced beyond the pockets of the majority of wine drinkers.

Poole took umbrage after Penfolds - now owned by the Australian multinational wine company, Treasury Wine Estates - put up the prices of its premium "Bin" range by double figure percentages, which have "forced retailers to increase their prices between 36 and 50 per cent without increasing margins", he maintains.

[Craig(NZ)]

The article also says

"In contrast, the latest Chateau Mouton Lafite will be selling for over $2000 - yes, that's just for one bottle!"

Wow is this a new first growth? Where do I get a bottle of Ch Mouton Lafite from?

[Mahmoud Ali]

The article also says

"In contrast, the latest Chateau Mouton Lafite will be selling for over $2000 - yes, that's just for one bottle!"

Wow is this a new first growth? Where do I get a bottle of Ch Mouton Lafite from?

It's a grey market wine originally destined for brand conscious markets.

Mahmoud

[Mike Hawkins]

The good deal around here at the mo is the 2005 Cellar Reserve Shiraz Cab which is $90-95. Next to the latest 389 prices it seems a good idea?!

Superb wine in the making, and compared to Australian prices, a steal....

[Mike Hawkins]

But who really pays $70 for 389? I certainly did not when I bought my annual half dozen from DMs. It is a great wine with a great providence and ages beautifully. Yes I am a fan.

It used to be. The grapes that went in to the pre-1997 vintages now go in to RWT and the like. You can't compare the last 12 releases with those of yester year IMO.

[Craig(NZ)]

The good deal around here at the mo is the 2005 Cellar Reserve Shiraz Cab which is $90-95. Next to the latest 389 prices it seems a good idea?!

Superb wine in the making, and compared to Australian prices, a steal....

I was too slow on this. Went back and someone had bought them all. Shame they had been there for months and months untouched

[n4sir]

Some of the prices of the upcoming icon/luxury wines apparently have already been released or leaked to the press:

Penfolds 07 Grange to cost $625
14:52 AEDT Tue Apr 24 2012
AAP

http://news.ninemsn.com.au/article.aspx?id=8456586

On May 3, Penfolds releases the 2007 vintage of its famous Grange shiraz, along with the latest vintages of its other luxury labels: Yattarna, St Henri, Magill Estate, Bin 707, RWT and Reserve Bin A.

The inaugural vintage of the new Bin 169 Coonawarra cabernet sauvignon will also be released.

The 2007 Grange will cost $625 per bottle. The 2006 vintage sold for $599.

The new Bin 169 Coonawarra cabernet sauvignon sells for $250 per bottle.

...Demand for the Bin 707 cabernet sauvignon, which sells for $250 per bottle, was just as great as demand for Grange.

[phillisc]

Hi all, enjoy the read of this post:

Will try not to be too provocative for fear of being in trouble again

The issue here can be resolved quite simply, as it is clear that the price structure put out by the company does not meet with consumer expectations:

RR, KH and TH price range 5-10 AUD
28, 128, price range 15-20 AUD
138, 50, 407, 389 price range 30-35 AUD

Super premiums one offs etc, price is arbitary, second hand market will sort it. it is a pity that the wine company, retailer etc, can't sort this in the first place.

The tricky bit, where to place St henri and magill, my two absolute all time favourites in all of the Pennies wines.

The first three groups constantly nip at their heels..."don't get too far away" and the super premiums push them into the shade...."we don't want to share the spot light with you 2"
Here in lies the whole Penfolds marketing problem, if the supposed quality of the first three ranges is becoming more and more diluted at the expense of premiums taking all the best fruit, then cull some of these or drop the price.
If the policy is to produce more super premiums then wines like St henri and magill are fast becoming marginalised...where do they belong. They will not get a look in with the average punter at 95-110. These two wines IMHO are the meat in the sandwich, critically important, as important as Mt Ed is to HOG, but they are not valued as highly. therefore they are lost in the wilderness here.

Perhaps I am completely wrong in my assessment.
Thoughts anyone

Cheers Craig.

[rens]

The 2007 Grange will cost $625 per bottle. The 2006 vintage sold for $599.

At auction the 2006 last sold for $500. Most other recent (1990-2005) sold for between $335 and $505 at Langtons. If I wanted the 2007 I'd be waiting until they hit the auctions and get 'em at a better price.