On June 28, Beijing Business News was informed that Fognac Group had informed its cooperative customers that it would increase the prices of its wine brand Penfolds' bin389 and bin407 products, and that the new prices would be implemented from July 1. In response to the price increase, Penfolds' relevant departments said they had no information to provide at this time.
Image from: Internet
For Penfolds the reason for this price increase, industry insiders said that with the epidemic gradually under control, the red wine market has gradually begun to rebound, Penfolds bin389, bin407 is the first in the post-epidemic era in China to restore demand for single products of wine, so the supply and demand relationship has changed, the enterprise for the changes in supply and demand, and the price has been adjusted accordingly. It is understood that the bush fires in northern Australia and the drought in several sub-regions in southern Australia have reduced the production of some wineries" vineyards by 60%. The reduction in production has also affected the price fluctuations.
It is understood that in the Chinese market where there are not many big wine brands, Penfolds wine has been favored by the majority of consumers for its superior quality and long history of the brand image during the twenty years of its entry into China. Beijing Business News reporter visited some supermarkets and found that the market share of Penfolds is relatively high, and it is understood that the sales of Penfolds wines are also relatively good, and many consumers come to buy them. Penfolds products are also placed in relatively more conspicuous places in the store.
The popularity of the end market with more consumers has also led to record results for the Cognac Wine Group. According to publicly available information, the Cognac Group's net sales revenue increased by 17% to A$2.83 billion in 2019, its highest organic growth rate in the company's history. EBITDA increased by 25% to A$662.7 million. The record results come as the Cognac wine group said it is considering spinning off the Penfolds brand business and related assets as a separate company listed on the Australian Stock Exchange by the end of 2021.
According to Beijing Business News, the split of the Penfolds brand will create two separate operating teams, one of which will focus on driving the luxury line brand Penfolds. The other team will focus on accelerating the development of the premium side of the Fognac portfolio, while reducing and optimizing the size of its mass and commercial wine business.
In response, Michael Clarke, CEO of Cognac, said the split may enhance the ability of Cognac Group and Penfolds to develop their respective strategic priorities and provide stronger long-term sustainable growth with separate teams and ownership structures.