TREASURY Wine Estates chief executive Mike Clarke’s high-stakes gamble on the biggest promotional drive in the history of the company appears to have paid off, as he pushes to evade a potential takeover by private equity firm Kohlberg Kravis Roberts (KKR).
An avalanche of buyers have scooped up a discounted $650 wine fridge by buying six bottles of high-end Penfolds wines after Mr Clarke launched an aggressive advertising blitz for the month of July, which will give Penfolds sales a fast start to the new financial year.
Under the offer, if drinkers bought six or more bottles of high-end Penfolds wine from a retailer, they could buy a 30-bottle Vintec temperature-controlled wine cabinet for $200 plus $55 in delivery charges, instead of the usual price of $650.
“Liquor retailers say there has been brisk foot traffic and a high take-up of the offer”
It is understood that up to 12,000 of the Vintec wine cabinets will be delivered to wine buyers across Australia who have already taken advantage of the promotion and bought at least six bottles of the Penfolds Bin series of luxury wines by July 30.
The high volume of Vintec cabinets taken up by Penfolds wine buyers under the offer means that Vintec will supply from the Penfolds promotion alone the same number of cabinets and wine cellar units it normally sells in an entire year. The promotion has been heavily subsidised by Penfolds, which has partnered with Vintec.
Penfolds generates about 75 per cent of total profits at Treasury, which three months ago received a $3.1 billion buyout proposal from KKR.
Mr Clarke, who began as chief executive with Treasury on March 31, a few weeks ago outlined a new strategy for Penfolds and labelled the wine cabinet promotion the biggest consumer-facing promotion ever undertaken by the company.
Liquor retailers say there has been brisk foot traffic and a high take-up of the offer, while Vintec itself says it has been highly successful.
Vintec group marketing manager Thomas Benhamou declined to comment on specific numbers but said demand was very strong.
“I can tell you it’s been very, very successful,’’ he said. “We’ve experienced very good demand.’’
Woolworths’ superstore liquor chain, Dan Murphy’s, has been experiencing strong demand from Penfolds buyers taking up the offer, according to Campbell Stott, merchandise manager for Dan Murphy’s.
“We’ve seen a pretty good level of demand,’’ he said. “I think it’s been a good promotional mechanic for them.’’
There are 188 Dan Murphy’s outlets around Australia. Mr Stott said it had helped reinforce the premium nature of the Penfolds brand by combining the high-end range with a temperature and humidity-controlled wine cabinet that buyers associated with the very high end of the market.
Vintec’s Mr Benhamou said wine cabinets generally had become more popular in Australia over the past decade and about 80 per cent of affluent people who undertook a kitchen renovation or built a new house put in a wine cabinet or wine storage solution.
They had started out as a luxury purchase but were gradually making their way into the mainstream.
Stand-alone wine cabinets ranged in price from $650 to $7000, while some customers who opted for a full in-built “walk-in cellar’’ were spending $40,000.
KKR pitched its buyout proposal at $4.70 per share for Treasury, which also makes brands including Wolf Blass, Rosemount, Lindemans, Wynns and Seppelt. Treasury shares closed on Friday at $4.99.
Under Mr Clarke’s shift in strategy for Penfolds, it will also be releasing the new range of high-end wines including the flagship Penfolds Grange in October each year, away from the traditional release dates of March to May which have been the custom for the past 20 years.