Investing in Australian Wine

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The Australian wine industry has a long history. Cut a long story short is a brief perusal of a narration of the industry at a certain era. The first fleet of wine in the broad Australia was made in 1788 after which vines were cut down. Through the year a major breakthrough was seen in the 1830’s & 1840’s with the establishment of wine industries that exported significant amount to England. This era made Australia gain a nickname, “John Bull’s Vineyard, an imitation for a typical Englishman who was a successful businessman at that time. Unfortunately, the wine industry slumped back in the 1900s and was reborn again in the 1970s.

This fluctuation in the Australian venture proved lack of experience in comparison to the wine that European countries used to produce favoured by the long experience they had acquired throughout the years. European ventures were great due to the knowledge they had on where to grow grapes, the applicable clones that surpassed produce, and the best flavoured extracts from their vineyards. This is what Australia had to copy in order to overcome their ignorance of the wine produce.
 
In 1970 Australia observed a landslide in wine consumption which went in line with multiple plantings of grapes in the Australian expanse. This time round all kind of varieties were planted to spread the golden opportunity. This although showed some progress, the 1980’s depression wasn’t a favour to the small vineyards which withered. The lesson learned after this economic downturn came as an angel in disguise as people were able to aim at those grapes that showed some survival traits in different regions. The conclusion was that research on soil, vineyard location, climate, grape variety, and in particular cloning the different grape variety was the epitome of the beginning of a great venture.
 
Australia’s classic wine was principally extracted from the best flavours of the thriving vineyard explaining the all new world popular wines. Some of these classic wines are still around and include; the Shiraz from the Barossa Valley, the Reisling from Clare and Eden Valley, the Cabernet Sauvignon from the Coonawarra region of South Australia which is currently famous for all red wine produce.  Ancient regions like Hunter Valley, is famous for Semillon, Shiraz and Chardonnay which is contributed by the Cowra region.  Some parts of the great Tasmania are famous for Chardonnay, Pinot Noir and Sparkling wines. Recent produce from the vast Western Australia are now bringing to the market produce consisting of Semillon and Sauvignon blanc.
The above named wines not only do they have promising name, but they are also trustable in the international market for the second to none characteristics and quality they give. More so, the investors are targeting the Australian products for the higher value they give, not forgetting the ageing potential that they promise.  
 
The whole lot of ventures emerged in the main stream 1990 where the Australian wine began getting corporatization benefits. The same time Australia experienced national prosperity as wines exports went up. Continuously increasing and emerging vineyards and small wine investment projects further propelled the industry to greater heights. This should not lure you on getting into Australian wine investment blindly as many others did only to face negative results. 
 
You are warned to be cautious and use your investment skills in observing wine market trends. This is especially in this decade which may not represent what the mind perceives. It is of great thought if you consider revising the fine prints and preferably get Australian professional advice before spending any dime. However, you are assured that today’s Australian brands like Pensfold, Rosemount, Jacob’s creek are few among many world valuable wines that the world is proud to house. Overall, investing in Australia wine business can never waste your energy out of nothing if you carefully watch your steps.
 
Investing In Australian wine: How To
A discussioncarried by CNBC and Andrew Basset, the director and founder of the Australian Wine Index (AWI) concluded that “Investing in Australian wine isn’t only good but great for investors going into the second half of 2011”. This is so, because wine investment in this region has risen to $30 over the past decades, not to mention the fine wine that winemakers tailor. Today, you will be more than jubilant given the chance to take a pie in the great Australian wine, not forgetting the many Australian classification lists that will guide you get the top notch wines in the market.
 
Buying and drinking Australian wine: A comprehensive guide
 
Online search engines feature more than 20,000 vintages of 2,400+ wines of more than 450 Australian wineries. Ratings and winery database makes it easy and effective getting your hands on the recommended and quality drinking windows. The site also provides hyperlinks to subscribers only to full tasting notes that gives a clue of what the wine is like. Queries initiated by users in the Jeremy Oliver site generate a plethora of information like the maker, cellar potential, ratings, and other click-through links to other relevant signature producers.
 
The unique online resource further comes with feature likes; comments and user reviews of each wine, monthly update of upcoming brands and re-tasting of older wines, user-friendly format and also all contacts like phone, e-mail and website of the winery producers.
Classification wine lists in Australia
Langton Classification list
 
The Langton classification can be regarded as an Australian market barometer that was incepted in the 1990 where the first classification (34 wines) of best performing and best prized wines in consistent to the track record and reputation was first published. The trend follows after every five years and the recent classification was made in 2010 with 123 wines in play. Today, Langton classification has become the most famous and respectable wine classifier outside Europe; in order to secure a position in the competitive classification, the wine has to have 10 vintages made.
 
The classification categorises the wines into sub-categories with regards to the prevailing market performance in a very long time. This categories are Exceptional- highly sought and prized wine (first growth), Outstanding – benchmark quality wines, Excellent – exquisite quality wine with solid volume demand, and Distinguished – fine wine consisting of emerging classics. Some of the wines placed in this list include emerging and cult wines which are enlisted as below:
 
Examples of Cult Wines  
                                               
  • 1963 MILDARA Peppermint Patty Cabernet Sauvignon from Coonawarra
  • 1959 LINDEMANS Bin 1590 Burgundy (Shiraz) from Lower Hunter Valley
  • MT. PLEASANT (McWilliams) Maurice O'Shea wines from Lower Hunter Valley
  • 1970 LINDEMANS Bin 3875 Hunter River Chablis
  • 1962 PENFOLDS Bin 60A Kalimna Shiraz Coonawarra Cabernet Sauvignon
 
Emerging wines
 
These are wines that attract a strong market but aren’t classified as yet. They are given the name ‘emerging’ because factors such as region where they are from, reputation they have, and their limited production determines their nature. Some of these wines include:
 
  • ALKOOMI Blackbutt Cabernet Blend, from Lower Great Southern
  • BALNAVES The Tally Cabernet, from  Coonawarra
  • BAILEYS 1904 Block Shiraz, from  Glenrowan
  • BETHANY GR RESERVE Shiraz from  Barossa Valley
  • BATTLEY Syrah, from Beechworth
 
The classification further makes use of data that includes sales frequency, bidding activities, volume of demand, price realisation and volumes of wine sold. Out of the thousand of wine in play only 10% of this becomes successful to be availed. Taking an example is the Classification (IV) of 2005. Some of these wines including Dalwhinne Cabernet Sauvignon, Seppelt Dorrien Cabernet Sauvignon, and Lake’s Folly Chardonnay are all travelling with the dynamic market. This classification showed that actually the secondary market has evolved over the last year.
 
The classification has also started seeing some emerging wine fetching the list. These are wine with no great track record but have shown to be market killers in an explosive way. Such wines include Langmeil, The Freedom Shiraz, Saltman No 1 Shiraz, Penfolds RWT Shiraz, Voyage Estate Carbanet Sauvignon among the list. It is clear that Shiraz wines are king in the international market.
 
Taking a look at Robert Parker Jr. who is an influential wine writer and spectator, brought into realm the cult wines. A score of 95+ can possibly propel a wine to the cult status. Cult wines are celebrity wine which emerged in the early 1980’s and are still thriving in the Langton’s classification. The emergence and acceptance of cult wines have changed the way Australian regard their wine by bringing in a level of new passion changing the thinking that wine was a game for the rich to becoming an arena great craftsmanship and skills.
 
The cult wine lost its magnitude during the peak of new dot-com era but prices of Penfold Grange and hill of grace still remain to thrust the interest of many. The cult wine criticism hampered the early breakthrough of Grange. Early entrants like Burge Family, Wild duck Creek, Torbreck, and Noon overcome the barriers and ironically enough the idea behind the criticism is what is in use to make hit wines today by the very critic enthusiasts.
 
Today the Australian Cult wine has proved to bring out the true taste of Australian wine to the American audience. Some of the middlemen impeding this include influential people like John Larchet – American market entrepreneur, Dan Phillips – American Importer, and retailers such as Chuck Hayward, Steve Zanotti and Kylie Meyer. The sheer sky rocketing effect of cult wines is evident by a number of wines such as the Three Rivers which rocketed prices by 400% after Parker Jr’s predicted its high score. This accounts to the wine attracting up to AUD$1400 in 2001.
 
Some early cult wines that were included in the classification (IV) of 2005 include;Kay Brothers,  Amery Vineyards Block 6 Shiraz Clarendon Hills Astralis Shiraz, Veritas Hanish Shiraz Fox Creek Reserve Shiraz, Greenock Creek Roennfeldt Road Shiraz, Noon Reserve Shiraz , Greenock Creek Roennfeldt Road Cabernet,  and Chris Ringland Shiraz.
 
The bottom line on cult wine is that they are speculative. A score of 95+ may bring smiles upfront but you ought to be careful on other successive vintage cause it doesn’t mean they will perform in a similar way. As a matter of fact, some of these wines like Clarendon Hills and Three rivers in the 2010 Langton’s classification are Parkers most favorite wines.
 
MW Classification System
 
This classification system is based on grape variety. The wine prices are derived from secondary markets rather than retail prices. Therefore historical auction data are brought and a quantitative mathematical formula set to establish a price driven classification. The market prices was reference because of the argument that the extent that consumer are willing to pay more or less of the set prices is based on wine critics and show system, not forgetting the experts reviews of each wine product. Bottom line is that this wine classification is based on what consumers in the secondary market are willing to pay laying references to supply and demand factors. For instance a recent rank of 100 Australian wines brought out a list containing 46 Shiraz, 25 cabernet, 10 Pinots, and 10 Chardonnays.
 
Nick’s Classification System
 
This classification system on the other hand employs categorisation of wine in different levels. It does this by placing the different kinds of wine into four categories each of this going into the different level of ranking. For example the very top level has wines namely;
 
  • Red wine – e.g Bleasdale Frank Potts Cabernet Malbec Petit Verdot in the top level
  • White wine – e.g. Semillon Sauvignon Blanc.
  • Fortified wine – e.g. Morris of Rutherglen Old Premium Liquer Muscat
  • Sparkling wine – e.g. Peter Rumball Sparkling Shiraz
The classification is fundamentally based on demands on selected auction; the internet, retail demand on nicks wine merchants’ store- Melbourne and direct markets. The demand here is measured in volume and prices in dollars. Moreover, any comment from international wine lovers also contributes to the classification.
 
Other wine classifications
 
There are those that use personal methodology by applying wine experts forming a tasting panel bringing out wines with outstanding quality. The wines are only those that have achieved a Gold, Silver or Bronze medal scores. The tasting panel comprises of professional bodies like wine educators, winemakers and show judges. This people have a broad knowledgebase in Australian wine and none are under 50 years of age. They finally avail notes on food matches and cellaring information on each brand helping consumer get an idea of how investing in the classified wineries can raise sells. The words from the experts classification precludes that a wine can be classified in accordance to the price, the variety of mine, or the personal appeal it brings out in consumers.
The bigger picture: Top 10 Great wine investments
With the many classification options, it may be daunting for investors to determine what is best to invest in. It has never been simple to come to a common ground of what to shop. Laying reference to what different classification systems have in common, brought out at least 10 vintages that could be great for investors to start on. These wines are based on own methodology from great wine selector experts (panel picks), the classification (V) of the Langton classification system, and also the MW classification system that are all explained above.
 
The wines are namely:
  • PENFOLDS GRANGE 1998Bin 95 Grange Shiraz, South Australia
  • BASS PHILLIP 2007 Reserve Pinot Noir, South Gippsland Victoria
  • CULLEN 2009 Diana Madeline Cabernet-Merlot, Margaret River Western Australia
  • GIACONDA 2008 Chardonnay, Beechworth Victoria
  • BLEASDALE 2006 Frank Potts Cabernet Malbec Petit Verdot, Langhorne Creek, South Australia
  • LEEUWIN ESTATE 2006 Art Series Chardonnay, Margaret River Western Australia
  • MOSS WOOD 2009 Cabernet Sauvignon, Margaret River Western Australia
  • MOUNT MARY 2006 Quintet Cabernet Blend, Yarra Valley Victoria
  • PENFOLDS 2010 Bin 707 Cabernet Sauvignon, South Australia
  • ROCKFORD 2009Basket Press Shiraz, Barossa Valley South Australia 
 
We picked a couple of wines from the list to explain the cellaring duration:
 
For Leeuwin Estate 2006, drink between 2010 and 2015. Within two the tree years it gains power, deepens in colour and becomes entrenched with a stronger tropical taste.
 
For Moss Wood 2009, this vintage requires two years to full maturity.This will give the fruit time to mature into something exhibiting linearity and simplicity. Though it has limited aspiration, it becomes okay in 5-7 years. It is fine but has gritty tannins that avoid jamming.
 

What are Australian Classic wine styles – for cellaring and investing? Hiddencreek.com.au, accessed 17 July 2011
2011, Investing in Australian wine, NuWire Investor, accessed 19 July 2011,
Wineries and wine ratings, Jeremy Oliver, accessed 18 July 2011 
Langton’s – Our Classification Explained, Langton’s, accessed 21 July 2011, 
Langton’s – Cult Wines, Langton’s, accessed 18 July 2011,
How the MW wines classification system works, MW Wine Auctions, accessed 19 July 2011