2016 Penfolds Yattarna chardonnay

Just saw an offer come through from Wally’s for this wine at $200/bottle. Looked on Wine Searcher and Wally’s is the lowest retail price in the country. But you can buy it direct from Penfolds USA for $150/bottle.

This has probably been discussed before, but how can Penfolds push their wine into the retail channel when they are undercutting retailers by 25 percent on price? Seems like a total loser for retailers. I guess maybe some people don’t want to deal with shipping? I am in favor of this model and applaud Penfolds for building out their DTC channel. I just wonder how they can get away with severely undercutting retailers.

The wine is very good, btw. Worth the ask? That’s a close call.

I don’t think Penfolds is doing it. They are owned by Treasury Wine Estates which also ownes Beringers, Wynn, Stags’ Leap, BV, Acacia, Rosemount, Cinq Cepages and many others. They retail all of their brands. For some reason I got on their mailing list and every other week they’re sending me some sale info.

They’ve recently re-vamped their Asian marketing, as Asia is a big market for their Australian brands, and this is what they said last year in a press release:

In California and Washington, states that allow producers to distribute directly, TWE is implementing a direct sales and distribution model to manage customer engagement and planning, merchandising, supply chain, invoicing and other back office activities for its largest key retail partners (national and regional). To service the remainder of the market, including the on premise channel, and independent and small chain retailers, TWE has appointed new full service distributor partners, Classic Wines of California and Vehrs Distributing, in California and Washington, respectively;

In Florida, TWE is implementing a new hybrid distribution model where the Company will directly manage relationships with its largest key retail partners (national and regional), collaborating with newly appointed distributor partner, Breakthru Beverage Group, to manage sales execution for these customers. Breakthru Beverage Group will operate a full service distribution model for the remainder of the market, including the on premise channel, and independent and small chain retailers; and

In a number of other states, TWE has appointed new full service distributor partners that it considers best placed to grow its brand portfolio. These include Breakthru Beverage Group in Illinois, Colorado, South Carolina and Minnesota, Johnson Brothers in Indiana, Hawaii, Iowa, West Virginia, North Dakota and South Dakota, Vehrs Distributing in Oregon and Specialty Imports in Alaska.

Has anyone shipped from Penfolds to the States? I imagine it would be very expensive and potentially damaging to the wine.

I don’t generally take much interest in anything Penfolds does but that price for Yattarna strikes me as pretty high. A quick search suggests we’d be paying AU $140 locally for the same vintage at our major wine retailer in Australia. Current exchange rates would have that sitting somewhere a bit over $100 US. I don’t think you have the extortionate taxes that we have if wine is coming into the country so additional cost is mostly shipping and distribution, so I could see US $150 being perhaps normal, but not $200. They do a good job with the Yattarna, but it is not like they have a super long pedigree with it, unlike many of their reds, and they have changed focus on where the fruit comes from since the early days in the 90s.

But why would it be damaging? All Penfolds wine sold in the States has been shipped to the States.

I figure/hope Penfolds distributed to retail in the States is shipping in a very large volume, which would make it more resistant to temperature swings, and with more risk mitigation methods, as this would likely be less per bottle when compared to shipping just a few bottles. I also think that large retail establishments also have more leverage than most individual consumers to make Penfolds rectify harm caused during shipping, which would give Penfold’s more incentive to spend more money to ensure shipping to retailers goes smoothly.

However, at the end of the day, this is just conjecture and I don’t really know, which is why I asked the question.

The enormous rise in Grange pricing is one of the stranger phenomena I’ve seen in recent years. I don’t know if the demand suddenly went way up in some other parts of the world or something?

I figure/hope Penfolds distributed to retail in the States is shipping in a very large volume, which would make it more resistant to temperature swings, and with more risk mitigation methods, as this would likely be less per bottle when compared to shipping just a few bottles. I also think that large retail establishments also have more leverage than most individual consumers to make Penfolds rectify harm caused during shipping, which would give Penfold’s more incentive to spend more money to ensure shipping to retailers goes smoothly.

However, at the end of the day, this is just conjecture and I don’t really know, which is why I asked the question.

The volume isn’t the issue. Any importer is going to ship at least a container or it’s cost-prohibitive. And Treasury is so large that they’re going to ship many pallets and containers. Those containers will be placed on the ships below the water line so they will be cool. Importers may use refrigerated containers, but most don’t because it’s not necessary if the wine is stored low.

Remember too that the wine has to be trucked to a dock where it’s loaded into a container and on arrival, it will be unloaded at another dock and put on various trucks. In the case of Treasury, they probably just load entire containers. But who knows how long the wine will sit at the dock on either end of the journey. And depending on where the wine is landed, it still needs to be trucked to various distributors around the country. The distributors will probably have cooled facilities, since they’re storing a lot of wine, and with luck, they will receive the wine from refrigerated trucks, but not always. From those distributors, it will be trucked to various retailers and my bet is that few of those delivery vehicles will be refrigerated. Sitting at a dock in Florida or Texas or California when the temperature is 100 degrees is not what you’d want for your wine, but it happens.

At the retailer, the wine may be held in a cool room like some retailers have, but more likely in a cellar that is not cooled or in the store itself, where the air conditioning is probably on to keep it a comfortable temp for the employees, not the wine. Or it may be taken to a restaurant, which may or may not have cool storage.

From the store it will be purchased by a customer who, if he or she happens to be anyone on this board, will take it home and put it in cool storage and will obsess about temperature ranges and will never think about the temperature swings and ranges that the wine was subjected to before it was purchased.

As far as retailers having any power, with Penfolds I would think retailers are the weakest link in the three tier system. A decent distributor will open a couple of bottles for staff and to show to accounts. If there’s apparent heat damage that the importer hasn’t picked up, they’ll contact the importer. But if there is no apparent damage, the wine will be on the shelves. And then some customer might discover some heat damage. That customer will need to show and convince the retailer that the wine is damaged, and the retailer will need to believe that the customer didn’t just forget about the wine in his car while he went about his business for a week or two.

But the good news is that wine is pretty hardy.

Were you to ship the wine yourself, if you happened to be in Australia, you could take it to the airport and check it as luggage. You may be able to purchase at the winery. I’ve done that many times. The wine will be loaded into the cargo hold and it will be pretty cool. Not freezing - remember that they ship dogs and perishables in the hold, but definitely on the cool side. The worst that’s going to happen to it is the loading and unloading of the luggage, but that’s only minutes, as opposed to perhaps hours at the container port. Thus, if you were to travel with wine purchased at the production site, your wine will be much better cared for than it would with just about any other method.

Were you to purchase it from afar and have it shipped, the shipping and import fees would make it a questionable savings and depending on how it was shipped, it would be somewhere between the two methods I described above. You could ask that it be shipped as a perishable, but that would also add to the cost.

Some people do have wine shipped but mostly if it’s otherwise unavailable. If they’re hooked up with an importer, the importer will simply toss it into a container that’s already coming over. That’s how a lot of retailers bring in special wines for their customers. So theoretically it could get largely the same handling that it would get were it to be imported by Treasury.

That was actually very helpful. Thanks!

The 1996 was $69.99 and I thought that was expensive!