How Penfolds, a 175-year-old wine brand, is staying relevant and appealing to the Asian wine drinker

The firm strives to go beyond traditional practices and customs in winemaking.

Penfolds, one of Australia’s oldest and most iconic wineries recently celebrated its 175th anniversary in October 2019. Founded in 1844, the winery has played a pivotal role in the evolution of winemaking with a history and heritage that profoundly reflects Australia’s journey from colonial settlement to the modern era.

Through the years, working with celebrated winemaking legends like Alf Vesey, Ray Beckwith and Max Schubert, Penfolds pushed bold development to extraordinary new heights, gaining worldwide attention, becoming a global business and internationally renowned winery.

Today, young millennial wine drinkers are much more likely to experiment with different wine brands from wine regions around the world. There is also a greater emphasis on Asian consumers, with the rising middle-class hungry for quality wines. SBR speaks with Yodissen Mootoosamy, General Manager, South East Asia at Treasury Wine Estates, to learn more about how Penfolds have evolved over the years to stay relevant and what they are doing to appeal to the modern wine drinker.

Penfolds just celebrated its 175th anniversary. How has the brand evolved over the years to stay competitive?

At Penfolds, our craft is underpinned by innovation and that is what has driven us to become one of Australia’s most famed and respectable winemakers. We are never hindered by traditional practices and customs, so we push the boundaries of winemaking. Because of this, we are Limitless in our ideas and pursuits.

Despite our great success over the 175 years, we continue to push the limits and in 2012, we released our most innovative project to date - 12 handcrafted ampoules of the rare 2004 Kalimna Block Cabernet Sauvignon.

The Special Bin 111A, a new, rare wine from the 2016 vintage was also unveiled to commemorate Penfolds’ 175th anniversary. Made only in extraordinary circumstances, Special Bin wines represent the pinnacle of winemaking endeavour, using only the most exceptional fruit parcels from the very best regional sources. It has been almost a decade since Penfolds last released a Special Bin wine, a testament to the quality, criterion and craftmanship required to craft a wine of this stature.

What are some of the challenges the brand faced over the years and how did it overcome them?

One of the challenges has been distribution of the brand in the region given the demand. To overcome the challenge, we work directly with retail partners and distributors to extend our market coverage where they have significant opportunity and a competitive model.

The wine consumer market is ever evolving. Who is the wine drinker today, and how is Penfolds targeting them? 

Today’s wine drinkers are getting younger and wine is part of their every celebration. To cater to this audience, we launched Max's in 2015 that comes with four classic varieties – the shiraz, cabernet sauvignon, and the quintessential Australian blend shiraz cabernet and chardonnay.

This collection removes the complexities of wine appreciation to make it a more enjoyable and accessible to the everyday wine-loving millennial who just wants an easy option without having to think through the intricacies of choosing the perfect wine.

How big a market is the Asian market for Penfolds and how is Penfolds catering to Asian wine drinkers?

The Asian market is a significant market for Penfolds, we have delivered strong growth in this region over recent years. There is still a significant level of untapped demand as more consumers move from other categories into wines together with the growth of middle-class population in Asia.

Our objective for the brand is to become a truly iconic luxury brand not only in Asia but globally. To cater to the Asian wine drinkers, we continue to invest in the brand to further build its credentials and to expand the consumer audience and portfolio through sustained investment and innovation, such as the Bin 518 Spirited Wine with Baijiu.

Are there any key differences in the demand and consumer behaviours within Asia?

There are significant economic and demographic differences within Asia, which implies differences in demand and consumer behaviours. There are some trends that we observe in consumer behaviour in Asia; firstly, the importance of millennials which form a significant part of the population, they are more social, more involved and tend to spend more than the Gen X.

There is also diversification of channels from supermarkets to online and specialty wine stores. Finally, luxury alcoholic beverages keep growing in the region which shows a significant increase in affluent and middle-class consumers in Asia, this implies that brands need to continuously build their credentials and luxury appeal to keep growing with that segment as consumers will keep trading up as income increases.

How is Penfolds meeting the demand in the Asian luxury wine market?

Penfolds is a distinctive brand with significant moments that have shaped what the brand is today; the great Max Schubert creating Grange in 1951, the launch of The Ampoule Project, which is to date one of the most expensive wines in the world and the hundreds of accolades and awards from around the world. We will continue to invest in the brand to further build its credentials and to expand the consumer audience and portfolio as the Asian luxury wine market keeps growing.

To that end, a key focus for us is driving scalable innovation, all underpinned by the Penfolds House Style such as the Bin 518 Spirited Wine with Baijiu and the champagne collaboration with Champagne Thienot, among others. Our House Style gives us freedom to venture across borders to find the best fruit available from the finest regions, to make our wines to a quality standard – this is consistent across our white wines, red wines, fortified wines, brandy…and now our Champagne and the continued focus on innovation and investment will help the brand meet demands in the Asian luxury wine market.

Penfolds has a very diverse range of wines, from the top of the range Grange to limited edition collections, and accessible wines that consumers can buy from supermarkets. Tell us more about this business strategy.

We focus on recruiting new consumers to the brand and Koonunga Hill and Max’s ranges play an important role in that area targeting consumers who are getting more involved with wines and millennials who want something different in wines.

We pride ourselves on the quality of our wines and Koonunga Hill has shown even an accessible wine can age gracefully, again underpinned by the Penfolds House Style. As income grows, consumers will naturally trade up as they aspire to buy more luxury products and buy the pricier Penfolds Bins, Icons and Luxury. Establishing brand loyalty now therefore is key.

What can wine lovers expect from Penfolds in 2020 and what are your expansion plans?

Our Penfolds Limitless events in Singapore and Bangkok to celebrate our 175th year anniversary was a huge success. In 2020, we plan to do more activities in Asia that allow us to speak directly to our consumers.

Our products are also already present in all key markets in Asia and our focus is to have the right distribution model for different brand tiers. We will keep strengthening our relationship with our strategically aligned partners and distributors to keep growing our distribution to expand the availability of our products across all segments and keep driving distribution in growth cities in Asia.

We have comprehensive planning with our partners yearly with clear expectations on performance targets and ways of working to track performance. Distribution and expansion in key cities in Asia will help us recruit new consumers for our brand.