For decades I have been strongly in favour of wineries selling their wines at the highest prices they can get. After all, they’re in business. Furthermore, the higher up the pricing scale that our iconic wines move, the greater and more profitable the price vacuum they leave beneath them – provided of course that the wines that fill that niche are well-priced against their global competition. Personally, I believe there’s an opportunity for the creation of an entire new class of Australian wine in the $250-$450 area, presently only filled by wines like Clarendon Hills’ Astralis, Jim Barry’s The Armagh and a few others.
At this extreme end of the wine market, the relationship between price and quality is anything but a straight line. It’s much more about demand and supply. If a company works hard via marketing to increase demand – as Penfolds certainly has with Grange – then the market will handle increases in prices – but only for as long as the market still perceives value in the proposition. Wineries can increase perceived demand through scarcity. Smart ones use export to achieve this. Tiny volumes of exclusive wines that do offer genuine quality can indeed sell for prices above their real merit just because they become sought-after. This same fact of life applies across a range of luxury industries.
Indexes such as the Langton’s Classification of Distinguished Australian Wine – which are based largely on price – are seriously flawed as indicators of current quality. It takes several years for the prices of new ultra-premium wines to show the secondary market performance necessary to hit the Langton’s radar, so it is more of a historic reflection of wine quality several years previously.
All of which makes a recent article by Alan Kohler in Adelaide’s The Advertiser the more bewildering. In a carefully constructed piece that suggests Stephen and Prue Henschke will make their Hill of Grace more expensive than Penfolds Grange, Kohler skates on thin ice by arguing that if they do, the wine would ‘thus become seen as Australia’s best’.
Even if the Henschkes want their wine to be more expensive than Grange, simple reality is that other forces will decide – not the Henschkes and not Treasury Wine Estates (the owner of Penfolds) – what Australia’s finest wine actually is. Wineries can set prices, but they do not control the preferences of gatekeepers like sommeliers, critics, bloggers, high-end collectors and the like. A wine does not improve and its perception does not increase simply if its maker adds $200 to its price.
Today I would suggest that Giaconda’s Estate Shiraz is at least as good a wine as either discussed by Kohler. Its production is smaller and the reputation of the producer is stellar. Its site is exceptional. But this wine, whose quality rivals those of the finest in the northern Rhône Valley, is less than half the price of the Hill of Grace and less than a third the price of Grange. So let’s not kid ourselves about the most expensive being the best. And because it’s only been released on four occasions, Giaconda’s Estate Shiraz does not even appear in the Langton’s classification.
