Penfolds (Grange)

Australia’s flagship wine, Penfolds Grange, has long seduced the European market with a palate characterised by exotically spiced black fruits supported by firm, grippy tannins.

 

First produced in 1951 as Penfolds Grange Hermitage, the recommended release price has consistently risen from under A$1, to A$785 (SFr 650) per bottle of vintage 2008 & ’09. The 1976, now holding a maximum Wine Advocate score of 100 points, was the first Australian wine to be released over A$20 and, given its latest auction price of nearly SFr 1,100 per bottle, could have returned over 6,500% to initial purchasers (30% per annum).

With release prices rising at a Bordeaux-like pace, Grange has some excellent value back-vintages that are still catching up:

Prices in CHF. Source: Liv-ex.com
Prices in CHF. Source: Liv-ex.com

Grange tends to have a drinking window that opens 10 years after harvest and closes 25 years thereafter, so all wines charted above have plenty of life left in them. Certainly vintage 2001 would look undervalued at present. Returns for the 2007 and ’08 have both been negative so far, with the former losing 13% and the latter 2% based on their Liv-ex mid-prices.

 

The 2009 was released on May 1st of this year, with the price range in Adelaide on release day between A$660 and A$800: probably worth shopping around, or waiting for the price to drop in the secondary market. Almost as a curiosity, also released on May 1st were 18 other Penfolds wines, including the Bin 170 Kalimna Limited Edition Shiraz at A$1,800 (SFr 1,500) per bottle and a Fifty Year Old Rare Tawny at A$3,550 (SFr 2,950) per bottle. These fit more with the collector profile than the investor mindset: limited supply for these rarely-made editions makes it very difficult to forecast future prices and potential returns but as a reference point the 1973 Bin 170 peaked on Wine-Searcher in 2011 with an average price of SFr 1,950.

 

Stirring more enthusiasm in the Australian press on May 1st was Penfolds St Henri Shiraz 2010, a wine that has ticked along quietly in the background since first being made in 1957. Vintage 2010 scored the highest ever for this wine, at 97+ in Wine Advocate and 18 points from Jancis Robinson.

Prices in CHF. Source: Liv-ex.com
Prices in CHF. Source: Liv-ex.com

With a recommended release price of A$90 (SFr 75) per bottle, the 2010 clearly has some room for price appreciation when compared to the highest scoring previous vintage, 2006. Add to this that the recommended A$90 is a shelf price, and so merchants will offer a lower price when buying in bond giving greater scope for returns.

 

A challenge with the many Penfolds ‘bins’ (such as St Henri) is that the secondary market is often very shallow and it may be difficult for investors to find buyers for them. Perhaps a consistently improved quality would increase the reputation and consequently the demand for back vintages, but this aspect remains a risk with the lesser known bins.

Wine Wealth is a consultancy guiding investors on wine as a form of investment. Further information can be found about our service offering, or by contacting us.

 

All market commentary articles can be found within News and Insights

 

Join the conversation with @WineWealth on Twitter