The gravy train rides again, with wine writers on board
I don’t go to lavish industry functions, free wine dinners and meet-the-maker PR tours through wineries and fine restaurants. I go to a few simple wine tastings, but mostly I buy my own samples for review. That way, I’m more than an arm’s length away from the people I write about and their products. Miles away, in fact, and I say exactly what I want to.
Here’s what can happen when a wine writer gets too close to a wine company: he begins to sound like its PR agency. Tyson Stelzer is a tireless wine enthusiast and ambassador, but his piece Penfolds Bin and Icon Release 2013 disturbs me deeply. Read on, and you’ll see why. I’ve quoted liberally from his post (in italics) to illustrate the point I’m making here.
It is difficult to overstate the significance of the 2010 vintage in the flow of the grand history of Penfolds,’ is how Tyson begins his post. Late last year I was privileged to a very rare sneak preview of this vintage at Penfolds’ Rewards of Patience tastings. In assessing almost every vintage of its top red wines spanning seven decades, one season drew unanimous superlatives from the eight wine critics in the room. You guessed it: it’s 2010, the vintage at the centre of this release.Please indulge me the longest introduction in more than 100 editions of Wine Taste
An ominous beginning. First up, Tyson tells us that Penfolds Bin wines will be released on Thursday March 7 2013, and Icon Wines – Grange, 707 et al - on Thursday May 2, yet he has previewed both lots on his website now. I’m surprised the folks at Penfolds agreed to this since they normally keep the two events quite separate.
More on this release: “Watch out 1990, 1986, 1976 and maybe even 1971!” Penfolds’ Chief Winemaker Peter Gago waxed [lyrical?] at the end of the Rewards of Patience tasting. “When 2010 Penfolds Grange arrives, I think it will blow all before it for a decade or two out of the water!” Strong endorsement, and this is no hyped marketing pitch – two other vintages will land before 2010 Grange sees the light of day in 2015.
Some of the finest red wines across the vast sweep of Australian wine history
No hyped marketing pitch? Tyson rates the 2008 Grange at 99 points - looks like he’ll have to go well above 100 for the 2010. And what about: Blow all before it out of the water? Are we talking war games or wine here? Is Admiral Gago high on sniffing too much Grange? There’s still more lyrical wax to cut through. This is what Tyson says about the Special Bin 2010 releases: In years to come, they will rightfully be released at monumental prices. These wines will define the reputation of 2010 in the coming decades …’
Such a high point in the arc of Penfolds’ winemaking history
Am I alone in thinking that this reads like a press release? Penfolds’ 2010 reds are wines of astonishing depth and potent concentration, rippling with voluptuous, succulent black fruits … The second factor at play in the 2010 vintage … lies in the fortune of this vintage in falling at such a high point in the arc of Penfolds’ winemaking history. A diligent regime of attention to detail in both vineyards and winery in recent decades has elevated virtually every cuvée in the line …’
Just when you thought we'd reached the top of the hyperbole curve, Tyson makes a final lunge for the Holy Grail: There has not been a time of such daring experimentation at Penfolds since those fabled early days of Max Schubert himself
Penfolds’ Cellar Reserve program is the source of new and exciting wines every year,' Tyson adds and quotes Peter Gago who says: “A boutique winery within Penfolds!”
Yes, that's what the man said. The audacity of it all leaves me speechless. I think it means Penfolds will produce more fancy special bins at even fancier prices like the 250 dollar Bin 169, or the 1000 dollar Special Bin 620 Coonawarra Cabernet Shiraz. These wines are nice little earners for Penfolds, and are sought after by investors and collectors. The former will lose serious money on their investments, as we’ll see further down.
2010 is the absolute pinnacle of vintages at Penfolds
First, a few more words from our sponsor about the fabulous 2010 vintage: Flight after flight, wine after wine, the very first sneak preview of Penfolds’ 2010 flagships in the Rewards of Patience tastings last year made a monumental statement of the calibre of this vintage: 2010 looks set to rank high among the finest vintages of all time. When I quizzed Penfolds’ Senior Red Winemaker Steve Lienert on the vintage at the conclusion of the tastings he declared, “2010 is the absolute pinnacle of vintages at Penfolds, one of the strongest years across the board for all Penfolds red wines across all varieties and all regions.” From everything I’ve tasted, I can only agree.
And we can only wonder. Enough of that, let's get down to the wines - and here I've included a counterpoint from the grand gadfly of the wine business Philip White. It's quite a contrast, and crafted in Philip's inimitable style.
Most prices haven’t moved this year
That’s what Tyson tells us in one breath. In another, he talks about substantial [price] hikes. So which is it? He means the basic Bin Red prices remain unchanged, except that Bin 407 is up to $75 from $65. Among the icons, Bin 707 and Bin 169 are up to $350 from $250 last year. That’s a 40% hike in one foul swoop as our Prime Minister would say. Bin 707 has almost doubled in price from $190 two years ago. Grange is has gone up a mere 10% to $685.
Tyson concedes that these are substantial hikes but adds that they don’t look so absurd in the context of global demand for top cabernet and spiralling Bordeaux pricing. Then he adds that these prices make other flagship wines in Coonawarra and Margaret River look like real bargains.
I can feel Tyson's pain as he’s squirming on the fence here – how can you take Penfolds to task for price gouging after they’ve wined and dined you for 3 days last year on every vintage ever made, and given you previews of every special wine yet to be released. TWE/ Penfolds knows how to embed wine writers but some wine writers don’t seem to know when they’ve become part of Penfolds PR corps.
Spiralling Bordeaux prices?
This is a curious claim, because it’s nonsense. Reuters reports that ‘Bordeaux prices headed lower all through the year . The top Premier Crus - Chateaux Lafite Rothschild, Margaux, Latour, Haut-Brion and Mouton Rothschild - were all down … as much as 40 percent from the previous highs.’
Same in Hong Kong, closer to home: ‘At Spectrum Wines' auction … cases of 1982 Chateau Lafite went for between $33,860 and $38,115 … A year ago, such cases of Lafite were selling for about $45,000. Spectrum wine specialist Dan Rhodes blamed part of the slide in Bordeaux prices on the glut of inventory - there is quite a lot of Bordeaux in Asia …’
This article in Bloomberg says that the trade has also marked down prices for the 2008 Bordeaux reds, and for 2011 futures. So where are these spiralling Bordeaux prices?
Filling in the middle ground
Tyson tells us that the 3000-6000 cases of Bin 707 are the first Penfolds icon reds to sell out in every market every year. That explains the 80%+ price hike in the last two years. Parent company TWE is struggling to produce decent profits despite sitting on the greatest wine brands in all of Australia: earnings before interest and tax of $73.4 million were down 20% on the same period the year before, so TWE is hell-bent on milking the hallowed Penfolds brand for all it’s worth.
What Penfolds has done in the last 2 years is to fill the yawning price gap that existed between the Bin 707 and Grange. My guess is they’ll settle around $750 for Grange next year, $400 for the 707 and 169, $200-250 for RWT and Magill, hoist the old Henri up over the $100 barrier and fill any remaining gaps with a few special bins.
Penfolds launch event for the Bin 169 2008 last year. Billed The Luxury Experience, it was held at the Fullerton Bay Hotel’s Clifford restaurant, overlooking the stunning Marina Bay Waterfront in Singapore.
The glut of inventory
The reason Penfolds left most of the standard Bin Red prices alone this year is that last year’s wines are still in the shops. Penfolds yanked their prices up sharply in 2012 - see Penfolds Bin Release 2012 - and struck serious resistance from merchants and consumers alike. These wines are Penfolds’ bread and butter, so TWE needs to be more careful.
At the ‘lower’ end of the range, Penfolds now has two levels of bin reds: the Bin 389 Cabernet Shiraz, the Bin 407 Cabernet Sauvignon and the newer Bin 150 Marananga Shiraz, all priced at $75. They’ll come down to under $60 discounted. The second tier is priced at $38, which will come down to under $30. These last wines will be hard to shift. Why? Because 4 out of 5 are 2011 reds, not 2010 like the $75 group.
2011 was a horror vintage for reds in South Australia which even Penfolds’ winemaking magic couldn’t make silk purses out of. Tyson rates these wines in the low nineties:
Penfolds Bin 138 Barossa Valley Shiraz Grenache Mataro 2011, $38 – 91
Penfolds Bin 128 Coonawarra Shiraz 2011, $38 – 92
Penfolds Bin 8 Cabernet Shiraz 2011, $38 – 92
Penfolds Bin 2 Shiraz Mourvèdre 2011, $38 – 91
The Bin 28 Kalimna Shiraz is the 2010, and it rates 96 with Tyson. He writes: Its colour is monumentally deep, jet black with a narrow, vibrant purple rim. The palate slowly uncoils to reveal tremendous depth of succulent black plum, blackberry and liquorice, with a crunchy vibrancy and an air of violet perfume that hovers from start to finish, framed in delightfully poised tannins of commanding structure yet ultra-fine restraint “This wine would do any Bin 28 back to 1959 proud,” Gago declared. It certainly did that day.
Sheer poetry! Philip White's take on the Bin 28 is far more down to earth: ‘Kalimna is a very important vineyard in the north Barossa ... Using this sacred name on a blend of grapes from McLaren Vale, Langhorne Creek, Wrattonbully and Robe, as well as the Barossa in general, is surely equal to Pernod Ricard’s blending of almost anything in the Steingarten brand, just as it stretched Jacob’s Creek to include most of South-eastern Australia, from Rockhampton to Ceduna, and perhaps now to its vineyards in China.'
And what does Philip think of the wine? He calls it a 'jolly wine, oozing somewhere between fresh conserve, with its intact macerated berries, and jam, which is more sugary, cooked, homogenized and gloopy.' There's a fair bit of wood as well by the sound of it, His final take? 'It’s pleasant, inoffensive, and industrial.' Read the rest of Philip's reviews on the new Penfolds reds here.
I suspect the Bin 28 will sell fast, but the others here will not. In our competitive market, even Penfolds can’t sell 91/92 point wines for $30 when you can buy lots of 95 point wines for $15 -25. Others like Andrew Caillard rate the 2011 Penfolds reds between 87 and 90 points. Not worth $30, clearly, and Penfolds isn’t the only game in town.
Tyson Stelzer scores the 2010 Bin 389 at 97 points, just one point behind his score for the Grange 2008. Philip White's take on the 389 is this: 'it’s as if the crew are so determined to make a junior Grange in style that they’ve exaggerated the worst aspects of the most awkward, woody Granges and the most rigidly over-oaked Bin 707s of yore …' Philip gives the wine 'a private score of about 75,' and adds: 'trust me in saying that this wood will never ever subside.’
An interesting aside: For many years, Bin 389 was called ‘the poor man’s Grange.’ At $75 a bottle, that doesn’t work anymore so Penfolds quietly introduced Bin 8 Cabernet Shiraz. I guess Bin 8 will now become known as ‘the poor man’s Bin 389.’ So it goes.
Investors, you’ll never get your money back and here’s why
Last year, the Brisbane
Times wrote that Grange had
‘enjoyed such success that it became an investors' darling and, among
international connoisseurs, Australia's most famous wine ... Unveiling the
latest vintage on Thursday, Peter Jago (sic), Penfolds chief winemaker, said: ''Isn't
it nice to know that should you not drink it [Grange], that it's sitting
somewhere in a cellar or in a friend's cellar and it's gaining value. And
that's a wonderful thing.'' '
These are curious times when wine writers behave like PR flacks, and winemakers become investment advisors. The notion that Grange appreciates in value over time is complete nonsense. Here’s the advice I gave in a blog post on Costco selling Grange at deep discounts: Never buy Grange at the time of its release.
That’s right, no matter how deep the discounts. Why? Because you’ll soon be able to pick up the current 2007 Grange for less than $400 at auction. Better still, you can buy the superior and much older 1996 Grange for $450 – $600 today. In fact, you’d have to go back to the early seventies before the price for Grange gets near the current RRP. The simple fact is that TWE has pushed the price of Grange so high that the brand can’t sustain it any longer. Check the current auction prices for Grange here.
Even the fast-selling Bin 707 isn’t doing that well on the auction scene, selling mostly for $150 – 200 a bottle at Langtons. If you paid $190 for yours 2 years ago, you won’t be impressed with the ROI. If you paid $250 for yours last year, you’ve lost money. If you’re buying the next 707 at $350, you’ll lose more money. Of course, if you bought Grange and 707 decades ago at the old prices, you’ll get more than your money back. That was then, this is now. You can hype up your precious wares all you like, but these are the bare facts.