Leap to luxury

Even beyond prized Grange vintages, Penfolds has some form when it comes to luxury. Its 2012 Ampoule project produced 12 ‘bottles’ of 2004 Kalimna Block 42 Cabernet Sauvignon – with each hand-blown ampoule of the good stuff priced at $168,000.

They all sold, and provided nobody opens one in the immediate future, chief winemaker Peter Gago will fly anywhere in the world to open the ampoules for the select buyers.

Now the brand is pursuing luxury as it attempts to cross the divide from high-end to the very top table. Yet it will stop short of ampoule levels of exclusivity – and Gago says the intention is to add another layer to its legacy rather than retreat entirely from the mass market.

He suggests the strategy is a “reasonably natural progression” for the brand.

“For a long time now, we've been globally benchmarking and we do so by wine scores, third party endorsement and such like. Back in the day, Australian wine was deemed to be lots of fruit, lots of flavour, good value for money – and that’s sort of where it ended.”

But those days are long gone – and now Gago thinks Penfolds can take the next step.

“I must admit, for a long time now, dealing with some people who literally run the country and others, they say to us, ‘Australia needs this sort of thing, the world of wine needs this and Penfolds is the ideal candidate’. Propelled by their best wishes,” he says, “why not go there?”

Meanwhile, the global addressable market at the top end of town has increased dramatically. But Gago underlines that Penfolds will remain broadly accessible, while attempting to draw customers towards its upper echelons.

“We often used to say golf is the language of business. Well, wine has sort of surpassed that. Now it's the new language of business, it opens lots of doors.

I've noticed that whole shift. Wine is not just for the chosen few or the cognoscenti, wine is now something that everyone does. So what you then do is you progress it through the different channels, across the different tiers, different price points and that sort of thing.”

Gago also suggests that Penfolds historic approach to winemaking means it has earned the right to position the brand as luxury.

“Penfolds has always been a top down approach. There are one hundred and seventy six years of evolution and development here. But in the modern era, we started with Grange, then Bin 707 followed, then St Henri - and Koonunga Hill only came about in the seventies,” he says.

“Unlike many others, we don't work for 10, 20, 50 years and then make a reserve wine. We started with the reserve wine. So it has legitimacy.”

Reap what you sow

Penfolds has been sowing the seeds of global expansion for decades, buying into California’s Napa Valley in the late eighties, while more recently creating champagne with Champagne Thienot, “where we started pricing above Dom Perignon”, says Gago. In the new year it will launch another, more affordable non-vintage rosé champagne. “But we didn't start off with the affordable – again adopting that top down approach.”

Penfolds also has a project underway in Bordeaux, with markets such as China particularly thirsty for French wine. As well as opening up new profit lines, Gaga says all this geographical expansion should help shore-up the brand’s legacy.

“This is the next one hundred and seventy six years. South Australia will be the epicentre, the spiritual home. But instead of going north and south within the state - or even like with our whites, the New South Wales, Victoria, Tasmania - we will jump across the Atlantic, we'll jump across the Pacific, maintain house style … but through a different lens that is called Penfolds,” he says.

“It's exciting. It's also future proofing - climate change being what it is you need to have that flexibility. And, if we have those different colours to paint with, we can deliver at a truly premium luxury level.”

The strategy

So how to get there? In short, more brand, less product, according to global marketing director, Kristy Keyte – and with consistency across all markets.

The cornerstones of that strategy were hewn from a three-day workshop. All stakeholders including CEO, winemakers, and heads of sales and marketing from around the world, plus Wunderman Thompson, had “an honest conversation, about what was working and what wasn’t,” says Keyte.

“One of the clear things that came through was that we have been far too focused on the product message, when what we need is for people to buy into Penfolds the brand - and then decide which product they want within our portfolio.”

Whereas a product-driven approach has worked in Australia to date, the “most noise” for that brand-driven approach came from “low awareness markets” where growth has been hard to come by, says Keyte. To change that, Penfolds must “build this emotional connection … and beyond that, become clearer around our portfolio segments and how we want to shape the portfolio”.

The need to think big also emerged strongly from the workshop says Keyte.

“We are no longer a small brand. We are growing up and we need to act like we are a bigger brand. That means globally consistent programming and brand building through the right channels consistently across all of our key markets,” she says.

“It’s no longer acceptable for us to have 25 different campaigns happening simultaneously around the world that might work in their own right locally, but not necessarily sending that global message luxury that we're looking for. So it was a great session and it led to some great insights.”

As a result, the product-focused positioning around ‘mastery’ has been swapped for one of ‘unwavering self-belief’.

“We landed that positioning really quickly in a follow up session with Wunderman Thompson, were able to create a campaign pretty quickly from there - and here we are today,” says Keyte. “There's still some work to do, no doubt about it, but we are much clearer on where we're going.”

Master plan

Where previously it was left to regions to decide when and where to run any of a dozen pieces of product-focused creative, now Penfolds has a ‘master brand’ to build upon.

That consistency of approach was welcomed by Penfolds’ regional operations, says Wunderman Thompson Australia CEO, Lee Leggett, with the resulting TV commercial launching around globally last month. Out of home, print, social, digital and in-store are set to follow – plus something slightly different.

“The purpose of this campaign was to establish a strategic platform for the brand. It's a really integrated body of work, but there is more to come,” says Leggett.

“We're working on a voice project which sees us pushing into more of an experiential space, and that's really interesting, because it sets up the brand for voice search and direct to consumer in the future,” she adds.

“Retail remains incredibly important. But we know that consumers want to interact with us in different ways. So I think that that voice piece is a really interesting project, too.”

e-commerce and ‘Gucci’ DTC

Wine has been slower than other sectors to embrace e-commerce and direct to consumer (DTC) approaches. But Penfolds knows the world has changed.

“The wine category has been a laggard in this fight. We've been behind the eight ball the last two to three years,” says Keyte.

“Online purchasing has been hugely accelerated by Covid over the last six months, and we need to shift with consumer behaviour. But this is really where we have looked outside of the wine category and asked ‘how are Guccis of the world attacking this?’ Because it's a very big part of their business.”

While owning distribution channels can increase profit, there are other good reasons to go direct.

“You’re able to control the consumer experience right through the journey,” adds Keyte. “We work with our retail partners on this, but looking at this as a Penfolds brand, it’s hugely important.”

The firm upped its delivery game as lockdowns hit around the world - with the results paying dividend, says Keyte.

“We've learnt that really well through the last six months where we've worked on our delivery mechanism for Penfolds -  how consumers feel when they open up their Penfolds package at home. We put a bit of investment there and the response has been absolutely phenomenal. So that alone is a game changer for us.”

Still all about the wine

Penfolds may be ditching product-focused comms for a brand-centric approach, but the wine remains “the be all and end all,” says Gago.

“That will never change. It's just a different way of doing things. For example, we had our global re-corking clinic program, which took us into many markets around the world. We've been doing that now for twenty-nine years, and it has been hugely successful. We did some collaborative work recently with National Geographic. People loved it.

“We've done events with Rolls Royce, Bentley, Ferrari, launches with Aston Martin and we look at many other global benchmarks … but we can't just be doing that,” says Gago. “We need a whole tsunami of this sort of endeavour that is consistently ultra high quality. We need our own message, rather than just be aligned with someone.”

Naturally, Gago says the best way to sell a bottle of wine is to pour someone a glass. “You can’t do that times however many billion people there are on the planet. But in an ideal world, that is what you would be doing.”

In the meantime, it will be fascinating to watch how Penfolds leap to luxury plays out with age.

Keyte says it’s a “long-term endeavour” but that sales and revenue will ultimately provide the answer, particularly within low awareness markets.

Gago, with 31 years at Penfolds under his belt, also plays the long game. But he wants quick results too.

“Yes, it is a longer term ambition to be where we ultimately want to be. But we have wines under our belt now with decade upon decade of runs on the board. So really [getting there] as quickly as possible would be would be a wonderful thing.”

No pressure then.