‘The poor man’s Grange’ now costs how much?

I see “the poor man’s Grange”, Penfolds Bin 389, is now retailing at more than $100 a bottle. Weren’t the Chinese super-tariffs supposed to put downward pressure on premium wine prices?
M.M., Thirroul, NSW

The Chinese authorities have now repealed their huge tariffs on Australian wine, imposed for supposed “dumping”. China was a big market for Penfolds high-end red wines, but these wines are in big demand worldwide. No doubt the tariffs, which peaked at more than 200 per cent, hurt Penfolds, but it has diversified its markets and the good thing about its kind of red is that it ages well; it can wait.

When wine prices fall, they do so mostly in lower-priced bottles. Discounting a $15 wine doesn’t damage a brand’s name in the same way as discounting a $100 wine does. For this reason, wineries are less likely to drop their prices on big-name bottles.

They’re adept at finding alternatives to lowering their prices, too. They can move surplus stocks through less visible means, such as wine clubs, online retailers, special deals where the price of the wine isn’t disclosed or by selling it as a “hidden label” or a “buyer’s own brand” wine.

MM, you also say in your letter that Penfolds Bin 707 Cabernet Sauvignon has appreciated at twice the rate of your house since the 1990s, which is when you were last able to afford a bottle. Like many other top brands, Penfolds underwent substantial price hikes in the early 2000s, but they’ve been fairly stable for the past few years. Like many top brands, premium Penfolds reds were probably undervalued in the 1990s, and it could be argued that they’ve gradually risen to levels of parity with similar wines on the world stage. I would argue their quality has also risen. When Château Lafite is $2000 a bottle, Penfolds Bin 707 could seem good value at $800.

Global parity when applied to, say, corporate CEOs’ pay is a whole other argument but, when it comes to wine, it does make some sense.

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