The Penfolds succession (and why you should buy at auction, not retail)

Of the notable genius displayed in Australia’s long winemaking history – from Ray Beckwith’s profound scientific insights to the crafting of sublime, long-lived reds by legends like Maurice O’Shea, Colin Preece and Jack Kilgour – the achievements of Grange creator, Max Schubert, soar.

What Max put in place — that O’Shea, Preece, Kilgour and others did not — was a powerful succession structure that guaranteed continuity of the wines he created.

Max became production manager at Penfolds Magill cellars in 1948, made the first Grange in 1951 and ‘retired’ in 1973. But until his death in 1994 he maintained an office at Magill and remained a mentor to Don Ditter and John Duval — his successors from 1973 and 1986 respectively.

Don had worked alongside Max from 1950 until his retirement in 1986. And John Duval worked closely with both Ditter and Schubert prior to taking the reins from Don.

Fortunately the winemaking culture survived the abrupt departure of Duval in 2002 – a consequence of the disastrous Rosemount takeover – with the appointment of Peter Gago, Duval’s experienced offsider, as leader of a well-seasoned winemaking team.

This continuity over a period of more than fifty years means that the Penfolds reds we drink today still bear the Schubert thumbprint of powerful fruit flavours, robust structure and age-worthiness.

The Australian winemaking scene today is unrecognisable from the fortified-driven era in which Max learned his skills. But even among the amazing diversity now available — and amid increasing cries for elegance — Penfolds sturdy reds just about always deliver, especially after a few years’ bottle age.

The Granges, Bin 389s, Bin 28s and so on that we enjoy today, are in many ways different from the ones that Max made. Fruit sourcing has changed over the years as Australian vineyards expanded – especially during the explosive nineties.

And several new labels have appeared, partly as a response to increasing fruit diversity, partly in response to perceived demand and partly through winemaker innovation.

But the deeply layered, complex style is still perceivably Max’s – even in the more elegant styles like Magill Estate Shiraz (for which he hand wrote the first specification in August 1982, nineteen years after retiring), RWT Barossa Valley Shiraz and Bin 128 Coonawarra Shiraz. In each case fruit sourcing ensures elegant flavour and structure, but not at the expense of depth and complexity.

For all of these reasons, the annual release of the Penfolds blue chips presents an opportunity to buy some of Australia’s greatest wines in mint condition.

Those buying as an investment, however, are likely to be disappointed. If you don’t believe this, go to and compare auction prices for older vintages against retail prices for current vintages. You may be surprised.

Older vintages generally sell at a substantial discount to the new release. This alone might discourage prospective investors. And for drinkers it means that if you want to enjoy Grange in its golden age – 15 to 20 years in my experience – auction is the place to go.

For example, as collectors forked out around $500 a bottle for the new and superb 2002 recently, auction goers collected the equally venerable 1996 and 1991 for just $427 and $405 respectively, or so-called ‘lesser’ vintages like 1989 for $349, 1992 for $279 or 1994 for $266. These prices include the fifteen per cent buyer’s premium and GST paid to the auctioneer.

Auction prices suggest that if you bought Grange at retail price before its mid-nineties internationalisation, you may have been on the money as an investor in the mid and late nineties – but would have seen little, none or negative movement in real terms since.

Langton’s records show a clear pattern of higher prices for the big-reputation vintages. The legendary 1990, for instance, recently sold at a nett $719, more than double the $319 fetched by the 1989 vintage. And 1986, another great vintage, fetched $577 while the 1985 attracted just $254.

What this suggests to me is that if you buy the best vintages as an investment, you may lose less money than if you buy the lesser ones. Or, from a more positive, drinking pleasure perspective, let someone else do the investing and cellaring, then buy up the mature gems at auction.

An important caveat is to check the provenance of wine with the auctioneer prior to bidding. Good cellaring is everything.

From a wine-quality perspective, the recent Penfolds premium releases, including Grange 2002, are exciting by any measure. I recently tasted these with winemaker Peter Gago and even discussed the likely end of cork as a seal for Australia’s flagship red. The Gago solution is unique. Read about it here next week.

Copyright © Chris Shanahan 2007