THE conspiracy theorists have been having a good old time of late with Foster's Group.
Just last month the latest releases from the Penfolds "luxury and icon" range hit the market, with Grange hitting the shelves at about $530 a bottle — up significantly on recent releases, which hit shelves below the $500 mark.
Foster's chief executive Trevor O'Hoy has admitted that the integration of the beer and wine businesses has not come as easily as was first expected, and a few have suggested that some pricing strategy is happening with
the coveted Grange to recoup revenue.
It's hard to estimate just how much the price of Grange has increased — Foster's has no recommended retail price on the nation's flagship red wine.
The upper end of the market is now $550 a bottle for the latest, 2003 vintage. Supermarket-owned retailers such as Dan Murphy's and Vintage Cellars are coming in at the $530 mark, while online sellers have it at $495.
This sudden rise in prices outraged Crikey, which emailed out a list of past Grange
vintages that went to auction and sold for $350-$450 a bottle.
That price, however, doesn't include the inevitable buyers' premium, while the actual cellaring conditions — under the house, or in the sock drawer? — can be suspect when buying at auction.
For Grange collectors — and there are many — the condition of the label, foil and owning original boxes can all have an impact on the final sale price.
But that doesn't mean there are questions that shouldn't be asked of Foster's.
Such as why the price discrepancy between Australia and overseas? Upmarket British retailer Waitrose has the 2001 vintage of Penfolds Grange in stock at £142.50 bottle, which is a mere $A293. That's almost half the price of Grange in Australia.
The much sought-after 1999 Grange, which American wine scribe Robert Parker gave a rating of 94-96 points, is also £142.50 at Waitrose in Britain.
The story is the same in the US, where the 2003 Grange is selling for less than $US300 a bottle.
At the Vinopolis wine shop in Portland, Oregon, you can find 2003 Penfolds Grange for sale at $US269, which is just $A280 a bottle.
Such is the price discrepancy that your correspondent met a pair of Australian backpackers in London a few years back who each had a case of Grange packed in their luggage. They planned to repatriate the wine, and cover the cost of their air fares in doing so.
Sadly, Full Disclosure can provide no report on how Sydney Airport customs officers treated the return of the prodigal red.
In Foster's defence, the price differential existed before it took charge of Southcorp. It says alcohol taxes, as well as local demand, are to blame.
It all results in a hefty amount of tax for wine drinkers to pay, and the mining boom isn't so great yet that teenagers can afford to go binge-drinking on Grange.
Retailers say they are simply charging what the market is willing to pay.
Staff at Coles-owned Vintage Cellars, one of Foster's key retail customers, say this year's Grange has been a big seller since its release.
"It is selling like hotcakes," one member of the sales team said.
"We have customers who requested an allocation, but we had to cut that allocation across the board or we wouldn't have had enough to go round. As it stands, we will run out of stock very soon."
While Foster's grapples with the integration of its wine business, a new board has been appointed to the Australian Wine and Brandy Corporation to grapple with the industry's future. Continued…
