“The question you should ask is whether the brand architecture can take it?" Professor Ritson said.
He believes Mr Clarke is heading in the right direction with his plans, but there are question marks about having the brand selling at relatively low prices for some labels, right up to the top-tier Grange. “In Australia 40 years ago having a colour television was deemed to be a luxury good," he said. Professor Mark Ritson, a retailing expert from the Melbourne Business School said the definition of what is a luxury item keeps changing and there is no hard and fast rule.
So how will Penfolds fare as it pushes to move up the ranks? Mr Clarke is undertaking a structural separation inside Treasury where the luxury brands such as Penfolds will be overseen by a separate unit away from more commercial brands such as Rosemount and Lindemans. This is being driven by higher consumption by increasingly mobile tourists, the rise of the middle class in emerging countries like China and India and growth in a strand of society that Bain & Co termed “HENRYs" – High Earnings, Not Rich Yet – who like to splash their cash around. A report last year by consulting firm Bain & Co estimated that luxury goods would grow 50 per cent faster than world GDP and break through the €250 billion ($361 billion) mark by 2015. Luxury goods sales generally are growing at a quicker rate than other retail staples around the world. “This has been something the winemakers at Penfolds have been pushing for since I’ve been here," he said. He has a vested interest, but Mr Gago said the shift to later in the calendar year has been championed by the winemaking staff for years but had been resisted by corporate executives until Mr Clarke came along.
Mr Gago already struts the international stage conducting wine tastings and master classes with the elite, and only last week was in Monaco holding court at a gathering of hedge funds and investment firms eager to taste the top-tier Penfolds wines. Mike Clarke, CEO Treasury Wines Photo: Arsineh Houspian “We think the 2010 is better," Mr Gago said. His 2008 Penfolds Grange received 100 points out of 100 from esteemed US wine publication the Wine Spectator, and a similar perfect score from noted US wine critic Robert Parker. Peter Gago, who has been Penfolds chief winemaker for the past 12 years and has been with Penfolds for 25 years, is absolutely convinced of the merits of the 2010.
TREASURY WINE WRITEDOWN PLUS
The obsession with Penfolds Grange among fine wine buffs reaches fever pitch each year on May 1 when the latest drop is released, so it requires a substantial shift in consumer behaviour.Ī plus for Treasury is the 2010 Penfolds Grange, which will come out of the blocks in October, eight months before its previously slated release date, is from a harvest that produced high-quality wines. He’s shifting the release date of high-end Penfolds wines each year to mid-October, away from the usual March and May. Treasury’s new chief executive Mike Clarke is trying to overhaul the company to act more like the custodian of fine wine brands and less like a grocery business stuffing its product onto shelves in a rush towards the end of each financial year to make sure it meets its profit targets.Ĭlarke, a British food executive who joined Treasury on March 31, is implementing the biggest shake-up at Penfolds in 20 years. The gulf between the top and bottom of the Penfolds range is one of the great conundrums for the brand, which makes up 75 per cent of the total profits generated by Treasury Wine Estates. But those wanting a cheap and cheerful bottle of red to go with their chops and steak on the barbecue only have to pay around $12.80 for a Penfolds Koonunga Hill shiraz. One part of Penfolds is already in this rarefied air: the $785-per-bottle Penfolds Grange, which has earned its spot as a luxury item around the world and is Australia’s most famous wine. It is vying for the same increased status as Australian boot maker R.M.Williams, which itself has grand plans to become a global heavyweight now that a private equity firm backed by luxury goods giant LVMH Moet Hennessy Louis Vuitton holds a 49.9 per cent stake. The venerable Penfolds, which has a history stretching back to 1844, is preparing to make a concerted push to elevate itself to join the ranks of the world’s luxury goods brands. Louis Vuitton, Christian Dior, Gucci, Prada, Cartier, Moet & Chandon, Penfolds.