Retail battle causes price of top drop to tumble

It had all the energy and vigour of a heated art auction, but in this case the price went down, not up, and the bidding frenzy wasn't over a rare van Gogh but the shelf price of Australia's most prestigious wine - Penfolds Grange.

By the end of last week the wine was put on sale for $479 a bottle at Coles, down from the recommended retail price of $625. It had started the morning as high as $600 at some stores.

The battle was fought mainly between Woolworths and Coles, with new player and US discount store Costco also muscling in to grab the attention of wine aficionados and claim the lowest price.

Woolworths, which owns Dan Murphy's, and Coles, owner of 1st Choice, Vintage Cellars and Liquorland, kept their selling price secret. It was left to Dan Murphy's to fire the opening shot, announcing a price of $554.60 a bottle. Forty minutes later Coles said it would sell Grange for $499 at its 1st Choice stores. Then Costco said it would sell Grange for $489.99. In response Woolworths and Coles settled on a price of $479.99 and $479 respectively.

Penfolds global brand business director Sandy Mayo was unperturbed. ''There is always this kind of activity going on but it's completely beyond our control.''