If you think the latest Grange represents Penfolds' best and brighest, you're wrong.
Treasury Wine Estates chief executive Michael Clarke generally takes a dispassionate approach to managing the winemaker's diverse stable of brands - with one notable exception.
“If I'm totally honest I am emotional about Penfolds,” Clarke told investors last month, in his first public comments since being recruited to improve Treasury's fortunes. “Thank God we've got that in our portfolio.”
This month is crucial for Penfolds and Treasury. Penfolds is the engine room of Treasury's profit and critical for the group to achieve full year earnings guidance. The annual May release of Penfolds' icon wines, including Grange, is always met with great fanfare but this year comes with a huge weight of expectation.
Penfolds is without a 2008 Grange, the wine that scored a perfect score from Robert Parker's Wine Advocate, triggering – to the disgust of some wine retailers – price rises before it even hit the retail shelves this time last year. The 2009 – yes, priced the same as the 2008 at $785 a bottle – will no doubt be good, but it's no 2008.
At the same time, China's demand for luxury wines is faltering. Recent figures released by Wine Australia show exports of premium red wines – or wines priced about $7.50 a litre –have slipped 11 per cent in the year to March, compared with a 6 per cent drop for all bottled wine exports to China.
Rabbit out of a hat
So, how does Penfolds pull a rabbit out of its hat, generating fresh excitement and all-important sales? With a parcel of fruit from its old vines at block 3C in the Barossa Valley's Kalimna vineyard and help from the Queen's nephew, David Armstrong-Jones, also known as Viscount Linley and David Linley. The son of Princess Margaret, he chairs a bespoke furniture and cabinetry company called Linley and is also chairman at auction house Christie's UK.
Linley been commissioned to design wooden boxes for a special release wine – the 2010 Bin 170 Kalimna Shiraz, a single vineyard wine not made since 1973. Penfolds winemaker Peter Gago launched the wine in London on May 1. At $1800 for a standard bottle, it is the most expensive bottled wine release by Penfolds in its 170-year history ( its most expensive release remains the $168,000 ampoule, released in 2012).
Launching the shiraz in London, the birthplace of Penfolds founder Dr Christopher Rawson Penfold, lends old world charm to the new world producer celebrating its 170th year. The original Bin 170, released only once before in 1973, was meant to be blended with Bin 169 Coonawarra Cabernet Sauvignon to create a Bin 60A. Instead it was released as a stand-alone wine.
This wine has been made many times since and, while it has never been commercially released, it has occasionally been entered in wine shows, winning a swag of gold medals for Penfolds.
Usually, the wine from Block 3C is blended for Grange.
Penfolds doesn't usually reveal how limited its supplies of elite wines are. It has made a rare exception for the 2010 Bin 170 Kalimna Shiraz, which will be sold in imperials, magnums and standard bottles. All up, there are just 5544 bottles. Of those, there are 11 imperials (6 litres) – with only seven released commercially for $65,500 apiece. There are about 5000 magnums, priced at $4800 a bottle.
The bottles are housed in bespoke wooden cases, designed by Linley. The imperial box features a compass and can only be opened with the combination of the longitude and latitude co-ordinates of Penfolds' Magill Estate.
Linley began the design in June last year. The boxes took about 80 hours to craft and a further 40 hours to polish, plate and engrave; the time involved was largely due to the complexity of the engineered locks. The lid is customised with the buyer's name accompanying the bottle number.
The cachet of special packaging is usually reserved for a wine other than shiraz, says Phil Hude, who runs Armadale Cellars in Melbourne. “Champagne has always relied on packaging to offer something different,” Hude says. “It creates interest and some hype. When Penfolds did that ampoule they may have only made a dozen, but look how much coverage they got for it. It was worth millions.”
Vince Salpietro designs cellars for wealthy executives, including BRW rich-lister Nigel Satterley. He expects the wine to flow to the cellars of Chinese multimillionaires and says Penfolds is taking a leaf out of the marketing playbook mastered by Bordeaux first-growth producers.
“Before you have even tasted it, you are so into the story of where the wine is from, how it has been crafted and everything else that it can taste like vinegar and you'll love it,” Salpietro says.
Such is the power of luxury. But Gago is staking his reputation of what's in the bottle. And it's not vinegar. Unblended and matured for 16 months in French oak, 55 per cent new, the 2010 Bin 170 Kalimna Shiraz can be cellared until 2055, long after Penfolds turns 200 in 2044.
“Why does this luxury stuff belong to the French, why doesn't little old Australia play with the big boys?” Gago argues. “With our reds, we are right up there.”
Critics will jump on this release as being a gimmick. A Bin 170 released as Penfolds celebrates its 170th anniversary? Gago is quick to point out that the wine, which has been in bottle since 2011, was supposed to be released last year – proof that the wine is the real deal.
“It didn't have the name 170, but it was wine we had kept to one side,” Gago explains. “It was meant to be released last year but someone around the table said guess what? We are turning 170 in 2014 . It wasn't purpose-built to be a commemorative but it couldn't have worked better.”
He says deciding whether the wine could make a stand-alone product, worthy of special status, is challenging. “If you were to listen to the bean counters there'd be a special bin release every three years,” Gago says.
“The current rate is once every 12, 16, 20 years. Even then I have to call in the tribal elders of Penfolds because it is a decision that follows you to the grave. A right or wrong call for a special bin, does it mean you are short-changing Grange? This is done with a lot of solemn pondering and tasting and tasting. This wine [Bin 170] had the endorsement of everyone who I showed it to.”
Wine retailers expect the bulk of the wines to find their way to Chinese cellars, even against the backdrop of slowing growth for top-end wines. Wine buyers in Australia can pick up bottles at Penfolds' cellar door, Langton's or at Duty Free stores.
THE AUSTRALIAN FINANCIAL REVIEW
Julie-anne Sprague is a contributor to AFR's Life & Leisure magazine.