Grange becomes pawn in supermarket price wars

IS NOTHING sacred? That's the question Penfold's chief winemaker Peter Gago was asking himself last night after learning the flagship Grange 2006 vintage, released yesterday, had become the latest target in the supermarket battle between Coles and Woolworths.

By InvestSMART · 6 May 2011

By InvestSMART ·
6 May 2011

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In the price wars, it seems not even Australia's most sought-after red wine could escape tit-for-tat price matching.

When the 2006 vintage went on sale yesterday, those rushing to Woolworths's Dan Murphy stores forked out less for their Grange than those lining up at the producer's cellar doors. Dan Murphy stores are selling the wine for $497 a bottle. Coles's First Choice started selling at the recommended retail price of $599 a bottle until about 11am when it instructed its outlets to drop the price to $495.

The price tag, perhaps coupled with hype around the 2006 vintage, left few in the wine industry surprised yesterday when interest in the Grange seemed higher than past years.

According to Dan Murphy's national merchandise manager Steve Donohue, about $8000 worth of Grange sold online before doors opened yesterday morning. Hundreds more bottles sold throughout the day despite the store's two bottle per person limit, and some shops' stocks of the 2006 vintage were cleaned out.

Meanwhile, more than 100 people queued from 8.30am at the producer's cellar doors at Magill Estate to buy a bottle of the highly anticipated vintage.

"Grange is all happening again," said Mr Donohue. "It seems to have taken a step up this year."

Mr Gago said the 2006 vintage is one of the best ever made and that each year they experienced difficulty in meeting demand.

"It's right up there with the very best of Granges made and the feedback so far coming through will attest to that. It's one of the better ones," he said.

Of the major supermarket chain's pricing decisions, he said, "Nothing surprises me as to what happens in the market place, but I do wonder about the number of bottles available at these prices and the duration of the offer."

He said he believed the image of Grange would not be affected.

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Frequently Asked Questions about this Article…

What happened when Penfolds released the Grange 2006 vintage — how did retailers price it?

When the Grange 2006 was released, supermarkets immediately competed on price. Dan Murphy stores sold the wine for $497 a bottle, while Coles' First Choice initially listed it at the recommended retail price of $599 before instructing outlets to drop the price to $495 around 11am the same day.

Did supermarket price wars affect availability of Grange 2006?

Yes. The price competition drove strong sales: Dan Murphy reported about $8,000 worth of Grange sold online before stores opened and hundreds more bottles sold during the day. Some shops' stocks of the 2006 vintage were cleaned out, and Dan Murphy enforced a two-bottle-per-person limit.

How much Grange 2006 did Dan Murphy sell online before its stores opened?

Dan Murphy's national merchandise manager said about $8,000 worth of Grange 2006 sold online before doors opened that morning.

Were there purchase limits on Grange 2006 at retail stores?

Yes. Dan Murphy applied a two-bottle-per-person limit to the Grange 2006 release to manage high demand.

Did consumer interest in Grange 2006 seem different to previous years?

According to retailers and the producer, interest appeared higher than in past years. Dan Murphy said 'Grange is all happening again' and noted the release 'has taken a step up this year.' The producer saw more than 100 people queuing from 8:30am at Magill Estate cellar doors.

What did Penfolds' chief winemaker Peter Gago say about the 2006 Grange and the supermarket pricing?

Peter Gago said the 2006 vintage is 'one of the best ever made' and that Penfolds often struggles to meet demand. He expressed surprise that even Grange was swept up in the supermarket price battles and wondered about how many bottles would be available at those prices and how long the offers would last, but he also said he believed Grange's image would not be affected.

Does the article show supermarkets will price-match even premium wines like Grange?

Yes. The article describes a tit-for-tat pricing dynamic between the major supermarket chains, with Coles and the retailer selling Grange cutting prices to compete — demonstrating that even highly sought-after premium wines can be targeted in supermarket price wars.

How did the producer's cellar door sales compare to supermarket demand for Grange 2006?

The producer's cellar doors at Magill Estate saw strong demand too, with more than 100 people queuing from 8:30am to buy a bottle. However, supermarket channels also recorded heavy sales and rapid sell-through, showing high demand across both direct and retail outlets.