The price of Bin 407 – what exactly is Penfolds trying to say?

How is it possible that the new vintage of Penfolds Bin 407 Cabernet Sauvignon, rated by many Australians as a place-filler in the Penfolds range, is priced at $100 per bottle? That alone places it in the company of elite cabernet-based reds like Houghton Jack Mann, Wynns John Riddoch, Moss Wood Cabernet Sauvignon and Mount Mary Quintet. Does it fit comfortably within this group? Not a chance. How it got there, however, is an interesting story.

I have always struggled to understand Bin 407. It enjoyed a solid decade after its inaugural vintage in 1990 at the hands of then chief winemaker John Duval, but has no real identity beyond a number. And, around a quarter of a century after it first appeared, that number has actually become part of the story.

Let’s first deal with the oft-repeated claim by Penfolds, visible on its website today, that Bin 407 is inspired by its very own Bin 707, the company’s ultimate and now rather pricey expression of cabernet sauvignon. Like Grange, Bin 707 is exclusively matured in brand-new American oak. Bin 407 is not. It’s largely matured in French oak, most of which is not new.

The first vintage of Bin 407 could indeed have been presented as a ‘baby 707’, but since then the style and shape of the two wines have moved in polar opposite directions. Nothing about the newly released 2018 Bin 407 connects it to Bin 707. It’s the most plush and juicy 407 to date (with the possible exceptional of the rather Californian-like 2013), and its fine, silky undercarriage is a massive departure from the Penfolds style. Not only does it fail to resemble a Bin 707, but the new Bin 407 is barely distinguishable as a Penfolds wine. 

Why is this important? Because it might suggest that Penfolds is prepared to compromise the very DNA it claims makes it special. The classic Penfolds stamp of firm, structural emphasis, assertive and usually American oak, together with sumptuous richness and drive of fruit, is supposed to be what stands it apart from the rest. That’s the message I’ve been presented by Penfolds over the last 30-plus years.

Next, let’s look at Penfolds’ oft-repeated claim that its multi-regional red blends, including Bin 407, are founded on a traditional style that doesn’t alter appreciably over time. But Bin 407, by some distance the most unpredictable of the entire Penfolds red collection, has shifted regularly and dramatically in this regard. Into the late 1990s and into the 2000s it became more gentle and dusty, even quite herbal. My notes for several vintages in the early 2000s contain the comment ‘un-Penfolds-like’. Since then, and before its present incarnation, it has oscillated from extreme to extreme – from plush and juicy to firm and textural and back to fine and dusty. Not much consistency there.

Is Bin 407 any good? It’s competent but far from special and without the Penfolds name on its label would likely verge on anonymity. I have allocated a gold medal score to just a single vintage: 1996. But, as you would expect from Penfolds, most of the 29 releases to date of Bin 407 have been technically well made. I expect it’s the sourcing of the fruit that has largely been responsible for their deficiencies.

What’s holding it back? Well down the company’s pecking order for cabernet, Bin 407 doesn’t receive the best cabernet fruit available to the Penfolds machine; far from it. Like most Penfolds ‘Bin’ reds, Bin 407 has never had a regional home; instead, it has been an ever-changing multi-regional blend. 407 has included components from top-level South Australian regions like Coonawarra, McLaren Vale and the Barossa Valley, but also a very significant proportion of fruit from un-feted regions such as Padthaway, Robe, Wrattonbully and even Bordertown. 

These lesser regions – which have never, ever produced a single must-have Australian red wine between them – also contribute to several other Penfolds reds. There’s even a splash or two in some vintages of Bin 707 itself. Small amounts of different fruit can indeed contribute to the spectrum of aroma, flavour and texture in a wine. Sourcing from lesser regions can also reduce the cost of fruit and therefore production, increasing profit.

Over the journey, the occasionally thin, minty, herbal and often menthol-like profile of Bin 407 has constantly reflected the lesser regions contributing to its mixed bag of a biological passport.

By how much has Bin 407’s price increased? When the first vintage was released it was around $20 and could be found cheaper. By 2000, the 1997 Bin 407 had a full retail price of $24. At the same time the 1997 Moss Wood Cabernet Sauvignon was around $75 per bottle. Skip forward to today and the 2018 Bin 407 will cost $100, while the 2018 Moss Wood Cabernet Sauvignon fetches $126. Against one of Australia’s signature cabernets, the Bin 407 has gone from being 33% of its price to 80%.

Has there been an improvement in quality consistent with this? While recent vintages have shown some improvement, the answer remains a resounding no. If anything, the modern wines are still not quite as good as the first releases, which were considerably more ‘Penfolds’ in style.

How has Bin 407 become this expensive? Let’s look at another Penfolds multi-regional red – the Bin 389 Cabernet Shiraz – the favourite of most loyal Australian Penfolds drinkers, which traditionally was always more costly than Bin 407. Today, the Penfolds website prices the 2018 vintages of Bin 407 and Bin 389 at $110 and $100 respectively – the other way around.

Ignoring for the moment its disappointing 2018 vintage, Bin 389 has enjoyed a truly stellar decade, with excellent releases from 2010, 2012, 2013, 2016 and 2017, each of which I rate at gold medal standard.

Historically, Bin 389 was sourced from higher-grade vineyards from a higher proportion of higher-grade regions than the cheaper Bin 407. While both releases from 2018 are good, competent wines, neither approach the exceptional. However, for the first time in a decade and more, I have rated the 407 higher, with 93 points to 91 against the 389. Might this be a future trend? It will be fascinating to see what the Penfolds production team have done with the 2019 wines since they pick and choose, barrel by barrel, which wines from which vineyards go into which label. This way they decide which is to be the better wine.

What on earth could cause Penfolds to realign the prices – and even possibly the quality – of its best-selling Bins 407 and 389? China, that’s what. And that’s where this gets interesting.

Penfolds is one of the multitude of brands owned by Treasury Wine Estates (TWE). TWE’s recently departed CEO Michael Clarke made two critical decisions that affect this narrative: to focus the overwhelming majority of his company’s marketing budget towards Penfolds – to the then obvious and the now all too readily apparent detriment of its other brands – and to target most of that expenditure towards China where, thanks to the strategies laid down by Clarke’s predecessor David Dearie, Penfolds had successfully tapped into the central nervous system of the world’s fastest-growing luxury wine market. 

For a number of reasons that could fill an entire story on their own, such as the superbly curated prestige image of the Penfolds brand in China (Dearie handled this brilliantly), the international fame of the brand’s flagship (Grange) and the fortuitous translation of the Chinese sound of the Penfolds name (‘Ben Fu’) into Chinese where it means ‘chasing prosperity’, Penfolds firstly built and then exploited the popularity of Australian wine in China. And without breaking any rules of trade, I should add…

According to former senior TWE executives, it was the China market that caused TWE to align the prices of Bin 389 and Bin 407, even though the company was profoundly aware of the quality difference between the two wines. TWE responded to Chinese pressure coming from two directions: (i) that the prestige market was founded by cabernet-based wines from Bordeaux and therefore Chinese buyers did not understand why a 100% cabernet was cheaper than a cabernet-shiraz blend, and (ii) because the actual numerical number of the wine – 407 – was greater than 389, so therefore according to local cultural expectations the wine should be at least the same price. 

Australian readers of this article might remind themselves that while it is growing at a furious pace, China largely remains a developing wine market where a huge volume of wine is still bought, given and served as part of a process involving the gaining and retention of ‘face’. While such concerns have little place in Australia, they do assume significant proportions in China where certain wines will actually sell better with a higher price tag.

So, a few years ago, and for China alone, TWE increased the price of Bin 407 to match Bin 389. Shortly afterwards, because Chinese people tend to live on their phones and match prices for everything they buy, this change was made global. Chinese buyers did not want to see that the rest of the world was paying less for Bin 407 than they were.

What’s behind the latest incarnation of Bin 407’s ‘style’? In my tasting note, I describe the 2018 release as ‘Australian cabernet for the Chinese palate’, which is further than ever at odds with Penfolds’ ongoing claim it is inspired by Bin 707. Stylistically, it’s everything that western winemakers believe the ‘Chinese taste’ in wine to be: delivering an opulent, plush and mouthfilling presence of very ripe fruit supported by a smooth, supple backbone of tannin that’s evident but surmountable. 

And like its equally popular stablemate in China, the Bin 389, its front label even mimics the Chinese habit of dating the label’s first vintage – in addition to the actual vintage of course. I stand to be corrected, but I think this is an unfortunate first for Australian wine.

Why am I paying all this attention to Bin 407?  After all, I’ve never met anyone outside China who really cares about it. Here’s why. It’s promoted as a classic Penfolds Bin red that reflects its owner’s unique winemaking traditions and is inspired by Bin 707. It might once have been, but I don’t believe that anymore. Instead, I’m convinced it’s now crafted to please the Chinese market, a notion with which Penfolds is unlikely to agree. 

Furthermore, it’s the wine critic’s role to protect the consumer, not the maker. Or that’s what I always held true. Critics should call out wines that are over-priced, over-promoted and over-positioned by their makers, even if it means one less invitation in the luncheon calendar. Especially so, in fact.

While we might see a change in future, Bin 407 is not currently made from fruit good enough to justify its three-figure price tag. Yet, because of the China market, it’s now more expensive than a wine that has traditionally been its superior, the Bin 389. 

It beggars belief that the same company that sources fruit for its multi-regional Bin 407 from several regions that have yet to realise their potential (to be kind), also prices its own 100% Coonawarra classic, the Wynns Black Label Cabernet Sauvignon, at a mere $30 per bottle. An infinitely better wine, on the basis of Bin 407 pricing the Wynns might instead retail for closer to $175. Similarly, the outstanding V&A Lane reds and the superb individual vineyard releases from Wynns are all now cheaper than Bin 407.

TWE is however a listed company which consciously chose to source a disproportionate measure of its profit from the Penfolds brand at the expense of others in its folio. Based on its actions, it appears to believe – à la Coca Cola – that great Penfolds red can be turned on as if out of a tap. Despite its treasured history and hallowed traditions, it has over recent years spawned more new Penfolds labels than a French sextagerian on IVF. And, apparently believing that China will continue to absorb steepling price increases, it is potentially risking the very market it has most profited from. Just like Australians, Chinese buyers don’t like being taken for granted. The more they learn about wine, the more questions they will want answers to.

Has cynicism has topped tradition at Penfolds, which for decades has been seen as the custodian of Australia’s red wine credibility? How would Penfolds winemaking legends such as Max Schubert and John Davoren, each still widely celebrated by the brand, react to the changes in style, the questionable messaging, underwhelming quality and over-reaching price of wines like Bin 407? Even if I’m only half correct, what would they make of Penfolds wines being priced and fabricated for a single overseas market?

How exposed would TWE be if, God forbid, it became unable to sell as much of its top-tier Penfolds wines into China? They’re already pitched well beyond what most Australians are willing and able to pay for them and not so long ago were mostly a fraction of the price they now demand. In Australia at least – and also within certain Chinese markets, I have reasons to believe – its very own pricing policy has led former drinkers of Penfolds to seek better value elsewhere.

Several years ago I suggested to the very top brass of TWE that it was high time that the Penfolds brand might show some love and gratitude to the company’s Chinese customers, who contribute around 35% of its earnings. They responded by going all in with Penfolds and price. For the sake of this company, a major driver of Wine Brand Australia to the world, I hope their approach proves correct.

Perhaps the answer to my initial question is indeed a simple one. If the contents of the bottle matched its price, expectations and branding, and wines like Bin 407 were again seen to represent value for money, I would have no reason to write this story.