Penfolds Grange is a cornerstone of the Australian secondary (auction) market with a reputation and track record that rivals some of the great classified growths of Bordeaux and Burgundy. From around the mid 1960s, Grange could be found in most Australian wine collector’s cellars. The 1955 vintage was listed by the American wine consumer advocate Wine Spectator as one of the greatest wines of the 20th Century. It has won such accolades numerous times and is the only wine to be heritage listed by the South Australian National Trust. The highly influential Langton’s Classification of Australian Wine acknowledges Penfolds Grange as Australia’s leading secondary wine market. Volume of supply and demand makes it one of the most highly traded wines at auction anywhere in the world. It has over a half century of history and price data making it the most researched and talked about Australian wine. The fame of Grange has reached far and wide. Aside from the marvellous tastings, the remarkable auction values and the controversies, it is really Grange’s aesthetic quality that makes it such an extraordinary thing. It is one of the few wines in the world which is treated like a treasured piece of art work – by all walks of life. If there’s ever a wine that can be called an experience – it is Grange. That is why it is followed with great interest by all observers of the Australian fine wine market.
The Grange market increasingly falls into two categories; Rare Grange (1951-1963) and Vintage Grange (1964 - present)
The early experimental Granges were largely given away meaning in principle the beneficiaries have made some outstanding returns! Even the early commercialised vintages – sold into the market for a few dollars represent good investments today. It is unlikely – however – that any buyer or recipient really looked at the investment value of Grange during the 1950s and 1960s. These early supporters enjoyed Grange because it was a really interesting wine. It was not until the 1980s that Grange really made its name as an investment type wine. The rarest Granges are 1956, 1957 and 1958 – because they were made without authorisation and produced in miniscule quantities. The most valuable Granges are 1951 (the first experimental vintage) and 1952. Interestingly the 1951 was kept back as museum stock for years. It wasn’t until the mid to late 1980s that collectors were able to secure bottles. This is one of the reasons that the labels and general appearance of the bottles are often in better condition than other vintages from the 1950s. The value of the 1951 is intrinsically linked to its historic significance – it is the most important wine ever to be made in Australia as it set the direction of contemporary Australian winemaking. The market for rare Grange is not as liquid as Vintage Grange and therefore exposed to both volatility and malaise. It’s a highly specialized area of the secondary market. A complete collection of Grange – in pristine condition and signed by Max Schubert – the creator of Grange – once sold for just under $250,000.
Vintage Grange plays a major role in the Australian secondary wine market. It is seen as a key indicator. Indeed for many years Access Economics – a think tank – used the 1971 vintage as an economic yardstick. For many years this wine outperformed other alternative investments including race horses, taxi plates and rare coins. The best performing Vintage Granges in the current market are 1986, 1990, 1991, 1998 and 1999. 2000 – not a recognised vintage – is a millennium wine and still tracks above expectations. The 2002 is also highly regarded and performs well at auction. 30th and 40th Anniversaries also drive prices up.
1990 Grange’s exposure as Wine Spectator’s “Wine of the Year” (the first ’outsider’ wine) certainly propelled sentiment. The mid- 1990s was a highly successful period for Penfolds with extraordinary media focus – no doubt adding some sparkle to the market. It was also a time of great vertical tastings and when traders – such as Anders Josephson – emerged as important market influencers. The Asian market also came to prominence – particularly Singapore and Hong Kong. These buyers had a profound effect on the secondary wine market changing the pattern of buying and the way of cataloguing fine wine. Anything that deviated off pristine condition – including minor scuffs on labels or capsules – was simply ignored. Once considered idiosyncratic this expectation has become standard across all markets and is a contributing factor to the increasingly high quality of personal and public wine storage. Robert Parker Jr’s influence in Asia is generally strong. He has been a champion of single vineyard Shiraz and became a lightening rod for the cult wine scene. He has tasted all of the Granges and even gave the 1976 a 100 points. Parker’s influence on the Grange market itself is marginal. The wine is steeped in folklore and has a life of its own. Australians are very proud of Grange – many of the buyers are ordinary people who may not even be aware of Robert Parker Jr. On the other hand 99 points for the 1998 Grange no doubt generated interest. But Australian taxi drivers probably had more influence!
Grange is the only Australian wine in the market – with the possible exception of Henschke Hill of Grace – which can really claim icon status. It has certainly prepared much of the groundwork for ultra-fine Australian wine. But it should be seen as distinct from the recent phenomena of cult wine. Consistency, aging potential and pedigree has earned its own club of one.
Penfolds – through its Red Wine Clinic programme – has made provenance a major issue at auction. Anything that deviates from pristine condition is now subject to downward price pressure. Previous cellaring conditions are an issue – but not as great as some people would like to think. Indeed Langton’s believe that the wine trade in Australia (and the UK) uses the issue of provenance as a weapon of doubt – a way of casting influence with their clientele. Experience with the clinics has shown that wine bottles that appear in good condition are generally ok. Anything with level problems or leaking capsules or even damaged/mouldy labels – can all suggest questionable provenance/ past cellaring conditions. These wines are always catalogued accordingly and generally achieve the prices they deserve. A successfully cliniced bottle – topped up, re-capsuled and given a clinic label and winemakers signature – will generally provide extra confidence to buyers. In Australia the concept of topping up is well received. Indeed the Penfolds Red Wine Clinic has become a part of the fine wine landscape in Australia. Generally re-corked wines from the 1970s and 1980s do not attract a premium. In theory prices are restored to par value. Increasingly the Penfolds Red Wine Clinics adds an assurance value to mature bottles. Buyers – seeking the best provenance possible – are now paying premium prices for “cliniced” bottles in mint condition – especially for experimental wines and older vintages.
There is generally a premium paid for old bottles of Penfolds wines with the signature of Max Schubert – the creator of Grange. Indeed they add extra rarity value to Grange collections. It is difficult to determine exactly what the premium is because the rare Grange market is so specialised and prices vary widely. It is about 10-20% extra within the life of an auction itself. Signatures of Don Ditter, John Duval, and current Penfolds Chief Winemaker Peter Gago generally only get premiums at charity auctions!
There was a time when the secondary market played little attention to the vagaries of vintage. Australia almost always had benign years, the wines were relatively cheap and expectations were generally low. However, this has all changed hugely in the last forty years. Recognition of vintages has become a very important feature of fine wine. While Grange is a multivineyard – often multiregional wine – it is still reflects the conditions of vintage. The overall winemaking philosophy allows for consistency of style and quality, but vintage conditions will bring a stamp of its own. There is not such a thing as bad Grange – but they are all different to each other. The light and shade across vintages is as palpable as any other series of great wines. The market appreciates this and also the historic idiosyncrasies of Grange. For instance 1972 is considered as a dud year – although it is a glorious wine. Grange was bottled in both South Australia and New South Wales until the 1970s – so there must be some form of bottle variation – not necessarily qualitative or quantifiable as the clinics have never revealed a meaningful difference. Buyer sentiment is always driven by the perception of quality, reputation and short supply. There is possibly a market phenomenon which won’t allow more than a few stellar vintages in a ten year period.
Penfolds Grange – across vintages – has a very commanding price position. The highly prized single vineyard wine Henschke Hill of Grace Shiraz regularly achieves over $400 – especially for top vintages. It generally surfs in the wake of Grange prices and is the beneficiary of the pull push effect. That is every time Grange prices move up, Hill of Grace prices follow and vice versa. Rockford Basket Press Shiraz rarely achieves more than $250 although it is enjoying strong upward price movements at the moment. Rare vintages of Penfolds Bin 707 Cabernet Sauvignon can achieve over $400 (ie. 1964). Moss Wood Cabernet Sauvignon, Cullen Diana Madeline Cabernet Merlot, Wendouree Shiraz and Mount Mary Quintet track between $120 and $200. Bass Phillip Reserve Pinot is so utterly rare it can drag up to just under $300. As you can see Penfolds Grange is the only wine in the Exceptional category of Langton’s Classification of Australian Wine that achieves the same sort of prices as First Growth Bordeaux or Grand Cru Burgundy.
Penfolds - especially Grange - has always performed reliably well through the thick and thin of the secondary market. Collectors and wine enthusiasts have a strong affection for the wines. Through a long track record of performance, recorded histories of tastings, and plenty of anecdotal stories and experiences, they know exactly what to expect. Even with changes in ownership, Penfolds has maintained a strong production focused image where quality, consistency and heritage are seen as vitally important. It’s a great reputation to have – especially in times of uncertainty.