The Auswine Forum

simm wrote:Hi Ric,
Are you still getting St. Henri for $40/b? The last 1999 I saw was over $50. Can I have some of yours at $40 then?

IMO. 707 up is just the wee bit out of my price range, and the last RWT I tried I didn't think was a real knock-out for the price ($150 thereabouts).

cheers

Simm,

The 99 St H was available for $40 on release and it still comes up on special at that price from time to time.

With the 707, its so so much as out of my price range, its just lousy value and RWT is even worse.

think there has been some level of dismay at Bin 389s price & quality in recent years. You could easily pick up the 96 vintage for A$20

If you use AUD20 for 389 in 96 and an average cpi increase of 3% per annum- except in 2000? (when we went GST )you get the following prices.
97 20.60
98 21.21
99 21.85
00 22.51
01 25.43
02 26.20
03 26.98
04 27.79

I accept that adjustments to the sale price on the primary market based on good bad vintages just wont work especially with such a high volume corporate wine. In that respect we as consumers should learn to take the good with the bad. That option is available to the smaller producers IMO.

The figure of 27.79 to me sounds like a fair figure. It is about what I would be prepared to pay for the wine in dozen lots. And yet we are expecting to pay far in excess of this. Surely SRP's cost have not escallated at greater than CPI? If it has then perhaps management should take a long hard look at how they run the business. As a comparison I tend to compare Orlando StHugo with 389. Both from similar sized companies, both corporate wines, both high volume premiums. And yet StHugo has remained at this price point whereas 389 has not. This despite the fact that StHugo has been a pretty smart wine over the past 5-6 years, whereas 389 as has been mentioned can be patchy. In this context then I am in the "389 has got too dear for its quality" boat. I am sure that I am not the only consumer out there saying this and I am sure that SRP suspects this. That is when I draw the conclusion that they no longer want my money. Thats fine I have plenty of choice in that price point. But dont expect me to like it when they do it, and mores to the point it will make me look twice before I buy their wine because of this perception that Penfolds has a poor QPR. This is reinforced when you hear of cheaper prices overseas.

Anonymous wrote:

think there has been some level of dismay at Bin 389s price & quality in recent years. You could easily pick up the 96 vintage for A$20

If you use AUD20 for 389 in 96 and an average cpi increase of 3% per annum- except in 2000? (when we went GST )you get the following prices.
97 20.60
98 21.21
99 21.85
00 22.51
01 25.43

The 96 vintage sold for $20 so if you use your logic the 01 would be 25.43 but (unfortunatly) this is not about inflation or costs, its about how much the market will pay for the wine and the Bin 389 Brand Managers are obviously very confident.

I remember when the 98 was released and people were buying (multiple) dozens on special and then reselling on sold.com a few months later at a huge profit, all of about $20 a six pack. talk about a waste of time.

If you use AUD20 for 389 in 96 and an average cpi increase of 3% per annum- except in 2000? (when we went GST )you get the following prices.
97 20.60
98 21.21
99 21.85
00 22.51
01 25.43
02 26.20
03 26.98
04 27.79

Good numbers on the Pennies. The 96 refers to VINTAGE though, thus the relevant price would be the 2001 price - $25.43. That, ironically enough, is about what I'd be prepared to pay! Good work.

Agree with the St Hugo analogy too.

Ged

Very poor, and grossly selective, use of numbers.

Let's take Hill of Grace. I paid $24.95 for it in 1989. Applying a 5% average rate, the 2000 should cost me $49.40, not five to six times that amount.

Likewise the Mt Edelstone the 1986 was $16.95 taking the same 5% into account, around $35 is a current fair price for the 2001. Is that what we're paying???

These wines have had 10-20% compound growth rate over 15 years!!

Why Penfolds? Why 389? Any other tall poppies you want to have a joust at?

The 2001 389 is a worthy wine at the price offered. Penfolds is in recovery mode in the export market; a market significantly larger than the domestic one. So they treat it as a loss leader, big deal, that's just what happens in a market economy. Even at the price we're paying, the it's a steal for the Americans compared to their equivalent quality Californian wines.

... and I have tasted the wine.

Such a distorted, simplistic view being discussed above doesn't help the cause of the wine industry at all.

Murray wrote:Very poor, and grossly selective, use of numbers.

Let's take Hill of Grace. I paid $24.95 for it in 1989. Applying a 5% average rate, the 2000 should cost me $49.40, not five to six times that amount.

Likewise the Mt Edelstone the 1986 was $16.95 taking the same 5% into account, around $35 is a current fair price for the 2001. Is that what we're paying???

These wines have had 10-20% compound growth rate over 15 years!!

Why Penfolds? Why 389? Any other tall poppies you want to have a joust at?

Hmm, well, I'm not sure that HoG and MtE, being single vineyard wines and therefore limited in supply, are an appropriate comparison. I thought the contrast with St Hugo was appropriate - a wine that when buying in the late 90s was priced a good 20% above Bin 389 and is these days available at 20% below.

I agree that by international standards Bin 389 is still a pretty good buy, but it seems only fair that if Southcorp have decided that it's worth possibly losing some customers in an attempt to rebuild their balance sheet, then it's also fair for buyers to vote with their wallets. Hey, if they were selling in Australia at "International" prices they'd probably shift a lot more of the stuff! They certainly endanger their goodwill in the local market by ensuring that Grange, for example, is at it's priciest in its home environment...

Clearly, the Southcorp regime under Lambert's dopey management made a horrible hash of everything; the present management faces a difficult task to rebuild.

Ultimately it's simple - the wine will find it's value in the marketplace. If it sits around on the shelves forever, they'll either ship it to the US and sell it at U$20 each, or have to cut the price like they did with Wynns JR/Michael (and the Lindemans Coonawarra's years before that...)

cheers,
Graeme

Murray wrote:Such a distorted, simplistic view being discussed above doesn't help the cause of the wine industry at all.

Murray,

When I saw that statement I could scarcely believe my eyes. If its "politically incorrect" to say things that don't help the wine industry's cause, then I am proud to be called politically incorrect.

Whilst I would like to see the industry do well, I am not a lackey to it and will continue to say what I like about it and any any other subject too for that matter.

GraemeG wrote:I agree that by international standards Bin 389 is still a pretty good buy, but it seems only fair that if Southcorp have decided that it's worth possibly losing some customers in an attempt to rebuild their balance sheet, then it's also fair for buyers to vote with their wallets. Hey, if they were selling in Australia at "International" prices they'd probably shift a lot more of the stuff!

Graeme,

Vegemite is priced differently between Geelong West and Geelong City from the same retailer, and they around 10 minutes apart. Australia and America are different markets with different requirements, the Ric's Finn review and the review in Fin Review made this clear. But this is not unique to Penfolds!!

Other makers jack their wines up for the overseas market. Is that equitable? No, but is is the way the market works.

Ric wrote:Murray,

When I saw that statement I could scarcely believe my eyes. If its "politically incorrect" to say things that don't help the wine industry's cause, then I am proud to be called politically incorrect. .

When I saw that statement I could scarcely believe my eyes. This is not about political incorrectness, it's about marketing a product. You are a retailer, do you base your pricing solely on the basis of the movements in the average CPI? I'd be amazed if you did. However the CPI analogy above that is the simplistic view that I am referring to, and this simplistic view, of pricing being only relevant to the CPI increase, is what I am saying doesn't help the wine industry, or any other industry for that matter.

Whilst I would like to see the industry do well, I am not a lackey to it and will continue to say what I like about it and any any other subject too for that matter.

Neither am I, and I defend your right to make those statements as much as I defend my right to question them, as I would expect others to question mine.

Murray,

I am not arguing with you about the pricing rational and agree the CPI example is not what its all about however I can see why people will use it to compare prices. Not too many industries that can increase prices the way some of these icon wines have been increased but thats supply and demand.

In a previous post you state "Why Penfolds? Why 389? Any other tall poppies you want to have a joust at?" and I will answer that from my perspective.

In many ways its not about SC, not even about Penfolds, its more about Bin 389. For many years a number of us regarded it as a benchmark value wine to compare others against, I know I did. Another reason so many of us are having a go at the price is because clearly we don't feel the wine represents reasonable value anymore and at full RRP its clearly way overpriced. I don't care how good the vintage is, there is no way I would pay full RRP for a bottle of 389 even if its as good or better than the 96 or 98. In reality, that is the price that Penfolds is setting and the price a lot of it will theoretically be sold at that level.

As to other tall poppies, why not, the same thing applies to Classic Clare, Jack Mann, Eileen Hardy and heap of others. There are a stack of wines from many producers which are clearly poor value (at all price points). Its not as though I wont pay $125 for a bottle, or even $300 I will happily do so but only if the wine measures up and frankly a heap of them don't.

There is one other factor here. Many wine lovers felt they have supported the brand for years and that SC dont care about them and that their only concern is making as much as possible. This is true and what SC is in business for but on the other side of that coin are the dedicated winemakers who put their heart and soul into the wines and go the extra mile to support and look after thier customers.

So I would rather support the little person who is trying to make great wine and make a living from doing it than a company whose objective is to make money by producing wine and who may be making water heaters or running a shipping business in 2 years time instead of making wine.

I reckon $35 bucks for a 93 point wine is fair value. There is tons of worse wine out there for the same price.
GW

Murray wrote

Very poor, and grossly selective, use of numbers.

Let's take Hill of Grace. I paid $24.95 for it in 1989. Applying a 5% average rate, the 2000 should cost me $49.40, not five to six times that amount.

Yes but Murray you are being selective here- HOG's price is being driven by the SECONDARY market. It is a collectible and as such commands those prices. I might be wrong but 389's market is mainly CONSUMPTION they need to foster this market to move the VOLUME. Any collector will tell you that the more widely something is available the less it will appreciate in value, as it becomes more of a COMMODITY. Thus 389 being a high volume albeit premium product is more of a commodity than HOG. If there is an X factor HOG has it but to me 389 does not.

Likewise the Mt Edelstone the 1986 was $16.95 taking the same 5% into account, around $35 is a current fair price for the 2001. Is that what we're paying???

ME is a victim of the "stablemate phenomenon" IMO its price has been dragged up by the HOG price to an extent. I also do not consider Henschke to be in the same Mould as Penfolds. Penfolds is owned by Southcorp which owns Wynns Lindemans and others. Henchke to my knowlege is independant medium size producer. Penfolds discounts its 389 and flogs it to Woolies and Coles, they do this because they have made a shit load of the stuff and need to move it for cash flow- to me that denigrates the label and its prestige. You cant have it both ways- either keep the production to a limit and protect your brand or go into over production and suffer damage to brand perception. This transparent move of Southcorps to flog the 98 Grange overseas and artificially create a shortage in Australia which then leads to the manic buying we saw last year amounts to nothing short of market manipulation. The Press generated in Australia about the unsatisfied demand and the stratospheric prices is all based on a perception that there was so much more demand than they normally supply. In actual fact the demand was probably the same but the supply had been reduced. The fact that Grange was to be had in London for AUD250 and places like Zurich for similar prices bears testament to the fact that the AUS supply had been reduced and the OS supply increased. Now we hear that there is cheap 389 in the US and we are getting a price rise.

These wines have had 10-20% compound growth rate over 15 years!!

Murray have you ever asked yourself why? What has driven this growth? Have their costs been going up at that rate- no. It is not inflation that has caused this price increase. It is pricing power driven by altered perceptions about our wine by overseas consumers. Parker , a Low AUD, increased globalisation, the internet have all contributed to this. Add to this , incredible asset inflation(referring to collectibles here) due to loose money supply policies have driven secondary markets through the roof and in so doing dragged the lesser wines with it.

Why Penfolds? Why 389? Any other tall poppies you want to have a joust at?

.Not just Penfolds, Not just 389. There are plenty of other examples. Metala Black Label for example

The 2001 389 is a worthy wine at the price offered.

Murray I cant argue with what you perceive as worthy at the price. My perception is different to yours. Lets leave it at that. The most important perception is that of the "market place" and as yet it has not spoken in Australia. In the US it has- it has said that 389 is worth AUD25.

Penfolds is in recovery mode in the export market; a market significantly larger than the domestic one.

So What?

So they treat it as a loss leader, big deal, that's just what happens in a market economy. Even at the price we're paying, the it's a steal for the Americans compared to their equivalent quality Californian wines.

So sell it all to the yanks for AUD40. But they cant, otherwise they would be. It wont affect me as I have already moved on to other better wines for the same price

... and I have tasted the wine.

So have I Murray, So have I!

Such a distorted, simplistic view being discussed above doesn't help the cause of the wine industry at all

Strongly disagree. The cause of the Wine industry is best served by not stuffing around with market prices like Southcorp have done and continue to do

Thought I'd throw in some California perspective: I can understand some of the angst expressed here, but I think you guys are missing the forest for the 389 tree in this case. Yes, 389 is selling for US$18 (and up) here (as have the previous vintages, going back at least 5 years). But there are several things probably going on in the case of this particular wine:

1) exchange rate has changed fairly rapidly, probably after contracts for the wine were made - and if Southcorp does business like any other big company, they hedged currency as soon as they received the orders (although I guess in this case, they are also the importer, but the principles are the same)

2) take the huge tax you Aussies have to pay out of the equation, which we don't have here - both alcohol tax and GST or whatever you pay.

3) As has been pointed out, the 389/407 wines are the keys to the higher end market here, I'm sure they do not want customers to abandon those wines. OTOH, from what I've heard, they really don't care about sales of the premium stuff (707, RWT, Grange), it's a relative drop in the bucket compared to something like Rosemount diamond label wines.

If you look for a moment away from 389, though, you'll find that most of the other Australian wines have escalated in price considerably here in the States: to name a few top end wines I can no longer afford (US$): E&E 75, 707 70's, Armagh 90, Graveyard 60's, etc. All, I believe probably 30-50% higher than your retail prices.

So, 389 is possibly just an anomaly because of the elements outlined above, and not a conspiracy? (Not that I'm ready to throw skepticism to the wind when it comes to the practices of big business - but remember, they're just maximizing their profits, regardless of which continent those profits come from.)

Regards,
Alan

Is it just me being cynical or is it coincidental the two main proponents for the 2001 389 being fairly priced are closely associated with a merchant flogging the stuff pre-release?

Some good comments here.
It seems that quite a few don't mind the price.
And all like the wine. Just that a few are dissapointed.

Red Bigot wrote:Want to start again?

Not particularly.

Red Bigot wrote:I've been buying and drinking the Pennies Bin reds since the late 60's, early 70's, I think I'm qualified to comment.

Great, you know it back to front then. How lucky are you? To have a wine that you know is going to provide consistent quality year in year out.

We call that quality, don't you?

I have read thru a lot more of your posts Brian, you do know your stuff and your obvioulsy honest.
It seems that both you and Mr TORB have a fair ammount of weight on this forum.

But it is a bit rough to have a crack at a wine that has increased $15 over 5 or 10 years.

Mr TORB, you too are quite knowledgable.

But... this looks hypocritical, having said that, it is easy to disect a comment.

TORB wrote:In many ways its not about SC, not even about Penfolds, its more about Bin 389.

Then this ...

TORB wrote:So I would rather support the little person who is trying to make great wine and make a living from doing it than a company whose objective is to make money by producing wine and who may be making water heaters or running a shipping business in 2 years time instead of making wine.

Hope that straightens out the errors.
Regards
Dave Stevens

I'd throw in some California perspective: I can understand some of the angst expressed here, but I think you guys are missing the forest for the 389 tree in this case. Yes, 389 is selling for US$18 (and up) here (as have the previous vintages, going back at least 5 years).

Alan you say the price has been constant despite a falling currency(jan 99-jan02 fell from 66c to 50c) a 24% devaluation. And then an appreciation in the next two years from 50c to 76c a 52% appreciation. I doubt that they hedged forward enough to cover those sorts of volatilities. In any case what it tells me is that demand is quite price sensitive for 389. Remember they are not trying to move just a few cases, it is a volume line. How else do you explain the lack of price increases in the US.

But there are several things probably going on in the case of this particular wine:

1) exchange rate has changed fairly rapidly, probably after contracts for the wine were made - and if Southcorp does business like any other big company, they hedged currency as soon as they received the orders (although I guess in this case, they are also the importer, but the principles are the same)

2) take the huge tax you Aussies have to pay out of the equation, which we don't have here - both alcohol tax and GST or whatever you pay.

Yes this is a big tax for us. But it has not changed recently and does not explain why our prices have risen and yet those in the US have not

3) As has been pointed out, the 389/407 wines are the keys to the higher end market here, I'm sure they do not want customers to abandon those wines. OTOH, from what I've heard, they really don't care about sales of the premium stuff (707, RWT, Grange), it's a relative drop in the bucket compared to something like Rosemount diamond label wines.

I am not sure that I understand your point here.

If you look for a moment away from 389, though, you'll find that most of the other Australian wines have escalated in price considerably here in the States: to name a few top end wines I can no longer afford (US$): E&E 75, 707 70's, Armagh 90, Graveyard 60's, etc. All, I believe probably 30-50% higher than your retail prices.

This is a different market based on limited supply and collectible demand

So, 389 is possibly just an anomaly because of the elements outlined above, and not a conspiracy?

I dont think anyone is implying a conspiracy here. I think we are identifying a producer who has deserted their original supporters/market.
They have done that by backing the US horse IMO. The problem is that the AUS horse seems to be making a run on the rails due to the exchange rate and they haven't realised yet.

(Not that I'm ready to throw skepticism to the wind when it comes to the practices of big business - but remember, they're just maximizing their profits, regardless of which continent those profits come from.)

I agree totally and that is their right and privilege to do so. But if they misread the market they will be the losers not the Australian wine buyers. We have a huge number of wines being released by new producers at much better price points just waiting to pick up their market share that they appear to be so carelessly discarding. With the increasing influence of the internet and forums such as these the word gets around so much quicker than it used to about emerging stars. The Penfolds franchise is still a magnificent one that has been built up over many decades, unfortunately new franchise labels can be built up much quicker nowadays
to catch up and fill the gap. Just look at the emergence of margaret river over the past 10 years.

Regards,
Alan

lost the plot wrote:Is it just me being cynical or is it coincidental the two main proponents for the 2001 389 being fairly priced are closely associated with a merchant flogging the stuff pre-release?

Whilst its true to some extent its natural for a couple of reasons (and may not/probally are not due to ulterior motives.) Firstly they have tasted the wine and believe it to be good wine and good value. Secondly people tend to support things they help to create. In this case a positive reaction to their tasting and positive endorsement of the wine ensures that they will naturally stand up for what they believe and have written, so its natural for them to support thier position.

Another guest wrote:Wanker.

Last one out please turn the lights off.

Yet another classic case of a drive by poster without the guts to sign thier own name when having a pot shot at someone.

Does it make much difference to a discussion if it is held on a computer forum rather than an actual 'human' forum? I think so. The language is hard to really understand sometimes if you can't see a persons expression. The nuance of humour, seriousness etc. is lost and the words become interpreted as the reader wishes, not the way the writer intended. Big limitaion. I guess that is why many contributors go to painstaking lengths to communicate their message and the use of graphics and the like.

Anyway. It seems not inconsistent to say the point is about just 389 and then go on to say you prefer small maker's wines to large corporations wines. One point is about a specific wine and another is a general point oregarding the industry and how you percieve it.

And it is perfectly fair to say a small grower or a full time family operation gets ones support because they have a hands on relationship with the wine and they dependant on the business/industry. Southcorp and Beringer Blass/Fosters are companies with strong histories in the white goods and brewing business. Many small family operations do get sold and many owners (but not normaly operators) do sell or many diversify their assets but their is a very strong tradition of owners/families having long connections with wine. More so than listed companies I would think.

And I'd rather have a close relationship at the vineyard door with Tim Kirk at Clonakilla than the friendly face at the Penfolds Barossa cellar door. Being pointed to the shiraz vines that make that stunning wine and seeing the few barrels of it maturing does more for me than being told I can't taste the better shiraz wines and the vineyards require a four day tour to see even if someone could take time to show me. If you don't want this sort of close relationship with your wine and it's maker then of course it doesn't matter. But some people really care about this stuff a it deepens their relationship with the wine.

But it is right I think if Southcorp wants to have different prices in different markets. That is business. And if you don't like it then buy something else. And have the absolute right to complain. It all happens, all is 'reasonable and we live with it.

And if having a long term relationship with a label is important, being a loyal buyer and believing your habits and support should be respected as part of that relationship then it will be a let down to feel disregarded in some way. When you have 10 vintages in the cellar and you feel the pricing is unfair in your historical context then it means breaking that continuity and begininng a new collection. Many people who cellar wine and all that goes along with that don't like this.

I thought the note that began with a difussion to the following point regarding the authors of a few pro-posts have an interest somehow in the sales of this wine was quite fair, if a little sharp. It's not an unfair question, particularly as posed, if it is true about the writers.

Cheers

lost the plot wrote:Is it just me being cynical or is it coincidental the two main proponents for the 2001 389 being fairly priced are closely associated with a merchant flogging the stuff pre-release?

So you think Gavin's not going to want to sell caseloads of the stuff?

Responding to the long anonymous post. My responses in the contrast colour:

Very poor, and grossly selective, use of numbers.

Let's take Hill of Grace. I paid $24.95 for it in 1989. Applying a 5% average rate, the 2000 should cost me $49.40, not five to six times that amount.

Yes but Murray you are being selective here- HOG's price is being driven by the SECONDARY market. It is a collectible and as such commands those prices. I might be wrong but 389's market is mainly CONSUMPTION they need to foster this market to move the VOLUME. Any collector will tell you that the more widely something is available the less it will appreciate in value, as it becomes more of a COMMODITY. Thus 389 being a high volume albeit premium product is more of a commodity than HOG. If there is an X factor HOG has it but to me 389 does not.

The price increase on the Hill of Grace, which occured with thee 1990/1 was justified by Henschke on the basis of rarity of the vines with the aged ones starting to die off, not the secondary market. There's no doubt that other makers have taken this opportunity though.

However you missed my main point in mentioning HoG, which was that using CPI as a basis to assess 'fair' price increases is wrong, both for 389 and Hill of Grace.

Likewise the Mt Edelstone the 1986 was $16.95 taking the same 5% into account, around $35 is a current fair price for the 2001. Is that what we're paying???

ME is a victim of the "stablemate phenomenon" IMO its price has been dragged up by the HOG price to an extent. I also do not consider Henschke to be in the same Mould as Penfolds. Penfolds is owned by Southcorp which owns Wynns Lindemans and others. Henchke to my knowlege is independant medium size producer. Penfolds discounts its 389 and flogs it to Woolies and Coles, they do this because they have made a shit load of the stuff and need to move it for cash flow- to me that denigrates the label and its prestige. You cant have it both ways- either keep the production to a limit and protect your brand or go into over production and suffer damage to brand perception. This transparent move of Southcorps to flog the 98 Grange overseas and artificially create a shortage in Australia which then leads to the manic buying we saw last year amounts to nothing short of market manipulation. The Press generated in Australia about the unsatisfied demand and the stratospheric prices is all based on a perception that there was so much more demand than they normally supply. In actual fact the demand was probably the same but the supply had been reduced. The fact that Grange was to be had in London for AUD250 and places like Zurich for similar prices bears testament to the fact that the AUS supply had been reduced and the OS supply increased. Now we hear that there is cheap 389 in the US and we are getting a price rise.

Agree, no problem with anything you've said. 389 is being used as a loss leader in other markets. My point with the Mount Ed was the same as for HoG, that basing the fairness of a price increase on the CPI is wrong.

These wines have had 10-20% compound growth rate over 15 years!!

Murray have you ever asked yourself why? What has driven this growth? Have their costs been going up at that rate- no. It is not inflation that has caused this price increase. It is pricing power driven by altered perceptions about our wine by overseas consumers. Parker , a Low AUD, increased globalisation, the internet have all contributed to this. Add to this , incredible asset inflation(referring to collectibles here) due to loose money supply policies have driven secondary markets through the roof and in so doing dragged the lesser wines with it.

I don't believe I made any assessment at all on whther Mount Edelstone or Hill of Grace is overpriced in the current market, and agree with what you've said.

Why Penfolds? Why 389? Any other tall poppies you want to have a joust at?

.Not just Penfolds, Not just 389. There are plenty of other examples. Metala Black Label for example

This entire thread was based on Penfolds and 389 in particular. It has been singled out and pilloried. If there is a general issue then describe it as a general issue.

The 2001 389 is a worthy wine at the price offered.

Murray I cant argue with what you perceive as worthy at the price. My perception is different to yours. Lets leave it at that. The most important perception is that of the "market place" and as yet it has not spoken in Australia. In the US it has- it has said that 389 is worth AUD25.

No problem with that at all. Everyone has their own perception, I disagree with a lot of other people's opinions, particularly in relation to the esteem given to overripe Shiraz with 200% american oak. Bu that is my opinion too. And you are correct, the marketplace will determine the ultimate success of the pricing strategy.

Penfolds is in recovery mode in the export market; a market significantly larger than the domestic one.

So What?

It's so to restore their balance sheet they need to increase sell through to hte overseas markets, therefore they set pricing for those markets, that pricing may well be different to what we see here.

So they treat it as a loss leader, big deal, that's just what happens in a market economy. Even at the price we're paying, the it's a steal for the Americans compared to their equivalent quality Californian wines.

So sell it all to the yanks for AUD40. But they cant, otherwise they would be. It wont affect me as I have already moved on to other better wines for the same price

Agree, that's why the price has been set differently.

... and I have tasted the wine.

So have I Murray, So have I!

Such a distorted, simplistic view being discussed above doesn't help the cause of the wine industry at all

Strongly disagree. The cause of the Wine industry is best served by not stuffing around with market prices like Southcorp have done and continue to do

As I said above, the distorted simplistic view is the one that says the CPI increase is an appropriate measure to assess price increases. That was my point in the post.

Can someone slip me a pair of rose coloured glasses? that's better (or for the L platers like me, right click and scroll over the text and all will be revealed! )

As I said above, the distorted simplistic view is the one that says the CPI increase is an appropriate measure to assess price increases. That was my point in the post.

Murray I take your point that the CPI may not be an appropriate measure to assess wine increases BUT a good percentage of the inputs to any business relates to CPI. That said I can see that during periods of production expansion that some stresses and strains develop which could lead to excessive demand. Grapes for example. Thus price increases due to increased demand and limited supply. It is pertinent to note however that in recent years this has started to reverse, and yet no price stabilisation.
You seem to have ignored my example where comparison to Orlando StHugo is given. Surely if Orlando is able to keep prices stable then Southcorp should be able to as well(unless of course Orlando are producing in China!)

Very poor, and grossly selective, use of numbers

I was merely responding to an example given by another poster of the 96 389. I was using his example as a starting point. So I was not being "selective"

Murray I am curious as to how you would assess price increases given that you have rejected the CPI model and ignored the comparitive product model.

Anonymous wrote:
Murray I am curious as to how you would assess price increases given that you have rejected the CPI model and ignored the comparitive product model.

Absence of evidence is not evidence of absence. (not sure who said that first)

I didn't ignore it inentionally, it's just that the text was flaring that much at the time.

The comparative product model is probably the most valid. As noted above 40% of Penfolds sales is in the US, therefore they need to shift product in that market and keep the name in the customer's eye. Therefore they need to represent comparative value to that market.

The same applies here, but it's a different market. Whether or not the strategy works remain to be seen.

David Lole wrote:Can someone slip me a pair of rose coloured glasses? that's better (or for the L platers like me, right click and scroll over the text and all will be revealed! )

My eyes are getting sore just reading this thread!

By the way, it's left click (Am I being pedantic? See you Sat.)


Cheers

Jamie

The comparative product model is probably the most valid. As noted above 40% of Penfolds sales is in the US, therefore they need to shift product in that market and keep the name in the customer's eye. Therefore they need to represent comparative value to that market.

The same applies here

I see my work is done!

I have no intention of debating this, as it sounds more like an incestuous family quarrel. I would like to offer an 'impression' of what is being talked about.

It appears that some of you guys are unhappy that a big nasty corporation has upset your apple cart by deciding how much you should pay for their wine, and by trying to compete internationally.

we all long for the good old days, but get over it. Buy it, don't buy, just stop bitchin'.

M

Anonymous wrote:

The comparative product model is probably the most valid. As noted above 40% of Penfolds sales is in the US, therefore they need to shift product in that market and keep the name in the customer's eye. Therefore they need to represent comparative value to that market.

The same applies here

I see my work is done!

Just to clarify; when I was talking about comparative product; that is in the customer's perception of value, not against one particular product. In your case you use St. Hugo as a specific. I don't.

If I did I'd say that HoG and John riddoch are direct comparisons; as they were in 1989; likewise Mt Ed, Wynns BL and 389.

Surely if Orlando is able to keep prices stable then Southcorp should be able to as well

Southcorp have kept prices stable in many cases across the product line. lindemans Padthaway Chardonnay has reduced in price over the years. The price creep of Wynns Shiraz has also been marginal over the years. I'll bet if Orlando thought they could sell the same volume of St. H at a higher price, they would set a higher price, and don't call me Surely, even if you do spell it wrong.

Stan wrote:The language is hard to really understand sometimes if you can't see a persons expression. The nuance of humour, seriousness etc. is lost and the words become interpreted as the reader wishes, not the way the writer intended.

Anyway. It seems not inconsistent to say the point is about just 389 and then go on to say you prefer small maker's wines to large corporations wines. One point is about a specific wine and another is a general point regarding the industry and how you perceive it.

Stan,

Your first paragraph explains the second.

Point one. The debate, in general, to that point was more about 389 than SC or even Penfolds in particular. Frankly I couldn't give a toss what the price is because I have pretty much given up buying the Bin range, the last two purchases rom memory were the 98 Bin 707 & St Henri (bought at mates rates) with the one prior to that the 96 Bin 389. What I was expressing (from my perspective) was to try and explain why I though other people were saying what they were saying.

Point 2. I then went on to say that in general I prefer to support the little guys but, by the way, that also does not mean that I don't buy from Orlando, Tatachilla etc who offer wines that I perceive to be good value. I just dont think Penfolds (notice I didnt say SC) and most of BRLH's top wines are worth it anymore.

Hope that clarifies the position.

TORB wrote:

simm wrote:Hi Ric,
Are you still getting St. Henri for $40/b? The last 1999 I saw was over $50. Can I have some of yours at $40 then?

IMO. 707 up is just the wee bit out of my price range, and the last RWT I tried I didn't think was a real knock-out for the price ($150 thereabouts).

cheers

Simm,

The 99 St H was available for $40 on release and it still comes up on special at that price from time to time.

With the 707, its so so much as out of my price range, its just lousy value and RWT is even worse.

So if the release of the SH99 was $40 and it can still be found around the traps for that price, it would stand to reason that dumping on Southcorp and subsequently Penfolds for the entire problem is not fair. If I'm seeing this wine (and the others follow along this price escalation) at most retail outlets for $55 then we have a really big profit margin just before the consumer reaches it!

I would truly love to try a bottle of 707 but unless I come into silly money, well...

Best,

simm wrote:[So if the release of the SH99 was $40 and it can still be found around the traps for that price, it would stand to reason that dumping on Southcorp and subsequently Penfolds for the entire problem is not fair. If I'm seeing this wine (and the others follow along this price escalation) at most retail outlets for $55 then we have a really big profit margin just before the consumer reaches it!

I would truly love to try a bottle of 707 but unless I come into silly money, well...

Simm,

I think you are looking at this from a funny angel. The RRP on the St Henri is about $50, the retailers were specialing it off at around $40 which gives them a much lower margin than normal. Many of them may also have done deals with SC to buy large quantity to enable them to get a better buy price.