Anyone who has read this blog will know that I follow Penfold’s Grange. However in recent years the rate of return of this wine has been nothing compared to Bordeaux (think 10% ROR compared with 100%). I’m still bullish on it as it is the only Southern Hemisphere wine which is an acknowledged Investment Grade Wine. As such that sort of uniqueness is the quality that Winevestors should search out.
Well there is real excitement in the Grange world. The 2004 was released on May 1st and the reviews have been wonderful. What is more the US reviews are not in yet. So, it is big risk time – jump in now, buy the wine, and hope that the wine receives the 99 / 100 points that the Aussi and British wine critics are giving it.
From the investment point of view there are a number of negative issues.
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The wine has been released at a significantly higher price than previous vintages, at a time of recession. Whereas even the most cocksure Bordelais have reduced their prices, Penfolds increased them by an acknowledged 10% and in this country it is around 35%
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Parker is no longer the Australian critic for the Wine Advocate. Instead it is Jay Miller who has been under fire recently
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The Australian fine market is in the tank. The world is moving away from the big, hot, fruit bombs and this has hit the top end of the market as well
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ONLY if the wine achieves 99 or 100 from both the Wine Advocate AND the Wine Spectator is this wine going to financially make a quick run. If it does the 1998 (described below) shows the probable price trajectory. Seriously a score of 98 will not crack it!
On the otherhand
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There are only about 9,000 cases of Grange created a year (compared to typically 20,000 from the Bordeaux First Growths). Of this production only about 1,000 cases is imported to the US.
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This is the only IGW in the Southern Hemisphere
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The Australians themselves have a vibrant wine market and drink and collect Grange their own ‘First Growth’
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The Australians are actively selling into Asia and China in particular
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Fosters owns Penfolds but has given the charismatic and excellent winemaker, Peter Gago, (see below), complete control over the wine. Gago has been in control since 2002, but has been with the winery since 1989. He has a great track record and is still only in his mid fifties.
The US critics have not assessed the wine yet. However the British and Australian critics have been vocal. In a May 15th review entitled ‘Heads Up on Grange 2004’, Jancis Robinson wrote ‘What I can say is that it is the most complex, sophisticated young Grange I can remember tasting. It is absolutely beautiful to taste, nay drink, now.’, she finished up with ‘.. but I thought I would advise purple pagers to look out for the 2004 Grange as stocks will surely sell out very fast.’ If you have access you can see the full article here
Peter Gago himself is quoted: ‘I really believe the 2009 release (2004 vintage) is one of the best yet for Penfolds, and boasts some exceptional wines. The wait for this Grange release has been much anticipated for good reason, and it is arguably the finest vintage since the stellar '90, '96 and '98 vintages. 2004 was an outstanding vintage in Magill, the Barossa Valley and McLaren Vale, where the grapes for Penfolds Grange are grown.' Now obviously that is the winemaker himself who is selling the wine, but it is a ringing statement.
The Grange pricing this year is a departure from their norm. They have historically ignored vintage quality (although it is remarkably consistent) and have increased their prices modestly and consistently from $100 / bottle in 1990 to $250 / bottle in 2003. The 2004 is retailing in the US at around $400. Decanter reviewed this pricing strategy.
Right now it is difficult to find the wine in the US. Some stores are selling it as a pre-arrival for Autumn 2009. It is worth asking your retailer for it directly, if you don’t see it on their web-site.
For Winevestors though it is a big risk: a much increased release price, and unknown US critic ratings. This is clearly a time to look over the backlog and see other Grange buying opportunities from auction. The following table identifies some opportunities, in the acknowledged great vintages, which are far safer buying bets than the 2004. In fact the increased price of the 2004 will boost these back vintages in the secondary market.
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