Brands are delicate things, and easily damaged
The fine wine market is a strange place: the higher the price goes, the less it is about the wine in the bottle. At a certain point, wine becomes a luxury good designed to impress others, along with fancy watches, designer garments and jewellery. The brand is everything, and the holy grail are brands that become household names: Rolex, Mercedes-Benz, Tiffany’s, Dom Perignon, Penfolds Grange.
Grange is Penfolds’ great icon. Everybody has heard of Grange, even people who know nothing about wine, even people who don’t drink. Years ago UK wine expert Hugh Johnson called it the only true first growth in the southern hemisphere. Other wine writers agree: Grange is as good as it gets.
Grange is collected by wealthy wine buffs and by investors, it’s bought and sold at auctions at reliable prices. The brand is minted gold, and it took 6 decades of great marketing to build – Max Schubert, the visionary, the custodians who followed in his footsteps …
The first way to damage a great brand is greed. Last year, Robert Parker’s influential Wine Advocate magazine scored the 2008 Grange at 100 points (just prior to release). Penfolds’ response was to raise the price by $100 from $685 to $785. It was a really obvious grab for extra profits, probably driven by the needs of Penfolds’ owners Treasury Wine Estates. The old price was already higher than the auction price of most Granges made in the last 4 decades, which means even the old RRP was not sustainable.
The second way Penfolds damaged the Grange brand was by releasing a wine just now priced at $1800 a bottle. What that’s saying is: Grange is not our top wine. We make better, more exclusive wines than Grange. A really dumb marketing move. Penfolds has released special bins before at a slightly higher price: the 2004 Block 42 Cabernet Sauvignon and the 2004 Bin 60A Cabernet Shiraz, both priced at $580 a few years back. 3 years ago the 2008 Bin 620 Cabernet Shiraz followed with a record price tag of $1000.
With the price of Grange close to $800, and the two next wines in its icon collection priced at $350, it would make a lot more marketing sense to slot the special bins in between at $500 – $600. That would give the collectors interesting one-offs to buy, but leave Grange unchallenged as the star of the show.
The third way to damage a great brand is to release substandard product. The just released Grange 2009 is just that, scoring 93-94 points with reviewers. These are good scores, but a $785 wine has to be up there at 97-98 or it falls short. A much smarter marketing move would’ve been to offer no 2009 Grange at all, and say the material went into Penfolds other reds (they’re almost all blends).
Moves like that make brands stronger and more exclusive. They build prestige. A great marketing opportunity missed. Instead, Penfolds had to watch St Henri, the cheapest of its luxury range at $95 RRP, sell out in a few hours. St Henri won rave reviews and 100 point scores, and stole the show. That makes Penfolds look like it has no idea what it’s doing when it comes to marketing its wines.
A final inept move from a marketing team that has clearly run out of ideas was to launch an Imperial (8 bottles) of Penfolds’ special bin 170 in a fancy wooden box for $65,000. Do they actually understand what a rare thing they have in their icon Grange?
Kim