When considering all of its applications, Palomino Fino probably doesn't really qualify as a fringe grape. It is, after all, the main grape in Sherry production and covers over 28,000 hectares throughout Spain. At one point in time, Palomino Fino was one of many (possibly as many as 100 according to Julian Jeffs) different grapes used in Sherry production, but now it is by far the most important and most widely planted of three grapes authorized for use in Sherry accounting for 95% of plantings (Pedro Ximenez and Moscatel, both used exclusively for sweet Sherries, being the other two).
There are three different Palomino grapes: Palomino Fino, which is considered the finest of the three and which I will refer to simply as Palomino in this post, Palomino Basto and Palomino de Jerez. Palomino is known in France as Listán, as Perrum in Alentejo, Portgual, and as Fransdurif in South Africa. For many years, the Palomino grown in California was misidentified as Golden Chasselas. There are also minor plantings in Australia. Acreage has been falling steadily pretty much everywhere outside of Jerez and the Canary Islands, where it is the primary white grape. The grape is thought to be native to Andalusia (the broader region of Spain that contains the Sherry Triangle) and was supposedly named after one of King Alfonso X's knights. The vine is susceptible to downy mildew and anthracnose, or canker. It is high yielding, producing about 80 hl/ha without irrigation and can reach as much as 150 hl/ha.
Palomino vines in Spain are used almost exclusively in the production of Sherry, but it's that almost that we're concerned with here. Increasingly, many Sherry bodegas are offering dry table wines vinified from Palomino grapes. One of the reasons for this is economic. Sherry takes a long time to make, from several months to several years depending on the style. The market for Sherry has declined a lot over the past few decades so rather than use the grapes to create a product they will have difficulty selling many years down the line, many bodegas are opting to create table wines which can more easily be sold immediately. One of the problems, though, with using Palomino for table wines is that the the skins of Palomino are extremely thin, so the grapes must be harvested by hand. To compound matters, the grapes are also naturally very low in acid and the juice has a tendency to oxidize very easily which, when coupled with the thin skins, means that the grapes must be rushed from where they are picked to a crusher as soon as possible. These flaws are actually virtues in Sherry production, but they make life difficult for the winemaker looking to make table wines from them.
I was able to find a bottle from Barbadillo, who was one of the first Sherry producers to produce a table wine from Palomino grapes. The bottle was from the 2008 vintage and cost a whopping $7.50. For some reason, the bottle is labeled "Palomino Fina," rather than Fino, and I'm not entirely sure why. In the glass, the wine had a pale straw color tending to gold. The nose was reserved with some green apple and almond scents and not much else. The wine was medium bodied with low/medium acidity. There was very little fruit here; a touch of green apple and not much else. It had a slight nuttiness to the finish that was somewhat reminiscent of a Fino Sherry. It was very clean with a chalky kind of minerality to it that was very refreshing, if not tremendously interesting. Oz Clarke writes that Palomino is "one of the dullest grapes in the world," and I can kind of see his point. This is a wine that has its place at the table: it would be a nice aperitif and would also go well with raw shellfish, but it wouldn't be the first bottle I reached for in either of those situations. The low acid really limits your food options here. If you've only got about $10 to spend, it's certainly a serviceable wine, but it's definitely not going to blow you away and considering the wealth of options available these days in the $10-$15 range, your money is probably better spent elsewhere.
Please see this more recent post for a tasting note of an amazing Canary Islands wine made from Listan Blanco, AKA Palomino.