Grange going cheap

Grange going cheap as Treasury Wine Estates clears its cellar

“I can assure you there has been no discounting of Grange at all,” Mr Clarke said.

“We have provided additional marketing support to help sell through the May release of our Penfolds icon and luxury wines. This is not pricing support and allegations of Treasury offering 10 per cent and 20 per cent discount on the 2009 Grange are utterly false.”

Increased marketing spending is to help retailers adjust to a decision by Treasury to bring forward by seven months the release of its 2010 Grange, which is viewed by critics as better than its 2009 stablemate.

Rather than release Grange and its Penfolds Bin range in May next year, Treasury released the wines on October 16 allowing the company to better smooth out earnings and attract consumers during the festive season and Chinese New Year in February.

But it meant retailers had to adjust to two releases of Grange in the one year.

Penfolds is crucial to Treasury’s financial performance. It is estimated to account for 70 per cent of the winemaker’s profits.

Advertising and marketing incentives typically cover adverts, in store displays and merchandise.

Documents obtained by cheap jerseys The Australian Financial Review show a senior Treasury Wine Estates executive had offered one retailer a 30 per cent “rebate” in the past fortnight for bottles of 2009 Grange.

The retailer was charged $580 per bottle. But, after paying for the bottle, the retailer received a 30 per cent “rebate”, which he said was a cash deposit in to his bank account that meant the average wholesale price he was paying for 2009 Grange was now $406 per bottle.

Including GST, cost price for Grange is typically $638 a bottle.

One retailer, offered a similar deal, said the company structured the discount as a “rebate” in order to keep invoiced prices for Grange consistent around the country.

“The discount will never appear on the invoice,” the retailer said.

“They protect the invoice price because if I get taken over by Woolworths, Woolworths looks at my accounts and goes back to Treasury and wants a 30 per cent discount for everything they have bought. So I send them a bill. It’s a convoluted way of hiding a discount.”

The Australian Financial Review spoke to retailers in Sydney, Melbourne, Perth and Adelaide.

“In the 25 years that I have been doing this, this is the first time they have offered money on Grange,” one retailer said.

The retailer said he was being offered “bonus stock” and money for marketing and promotion.

“They are clever with how they do it,” the retailer said.

“They can call it whatever they like. I call it a discount.”

Despite Penfolds offering its biggest promotion in history in July discounted wine fridges for consumers that bought any six bottles of Penfolds Bin series or luxury wines retailers say excess stock remains.

More than 12,000 fridges were sold.

Mr Clarke said most of the 2009 Grange and Bin wines released in May had been sold.

But he said the winemaker was no longer trying to sell its entire production in the one year, instead holding on to stock that it could sell more profitably in future.

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