Australia may not be the first nation that jumps to mind when you think of “top wine-making regions”. After all, nearly 20% of the Great Southern Land is desert. But, Australia is actually one of the most popular wine regions in the world, ranking fifth in the world for total wine production.
Shiraz varieties are the forte of Aussie winemakers, which has propelled regions like the Barossa Valley into the top echelon.
But does that make them a good investment? And how do Australian vintages compare to traditional investment regions like Champagne or Burgundy?
The Australian wine region
The Australian wine region isn’t just one of the most popular – it’s also one of the broadest. The massive island hosts 56+ unique wine regions, mostly splattered along the scenic coastline.
Victoria accounts for about 15% of Australia’s vineyards, and New South Wales stands at nearly a quarter. But these figures pale compared to the undisputed king of Aussie vino – South Australia, which makes up 52% of Australia’s wine-growing land.
Why is South Australia the best Australian wine region?
Each Australian state is home to some terrific vintages. But when it comes to prestige, consistency and elegance, it’s hard to look past South Australia.
The South Australian region, and more specifically Adelaide Hills, is often compared to Champagne (the region) – each sharing a moderate climate, deep, nutritious soil and elevations perfectly suited to growing and harvesting grapes.
The cooler temperatures lend themselves to a slower ripening period, which has a two-pronged effect on the wine’s quality. It allows the flavour profile of each bottle to develop unique characteristics, rather than the more sturdy, higher-proof wines commonly found in warmer climates. It also lengthens the maturation period (drink window) of each wine.
Similarities to Champagne (the region) aside, just across the road from Adelaide Hills we have the Barossa Valley wine region, home to Australia’s most valuable wines. It’s the nation’s Shiraz capital, and for good reason.
Barossa Valley is renowned for hosting some of the oldest grapevines in the world. And it’s thanks to one such vineyard – distinguished local wine producer, Penfolds, – that Aussie wines are considered investment-grade by sommeliers and collectors around the world. In fact, Penfolds produced one of the 10 most expensive bottles of wine ever sold with their ultra rare 2004 Block 42 Cabernet Sauvignon – made from 130-year-old vines!
Caption: Sourced from Decanter
Barossa Valley is home to other top-tier investment wines, too. Penfolds’ internationally acclaimed ‘Grange’ and Henschke’s ‘Hill of Grace’ fetch prices comparable to Screaming Eagle – the elite Californian wine – and DRC (Domaine de la Romanee-Conti) – the creme de la creme of investment grade wine both in and outside of Burgundy.
Investing in Australian vintages: the state of the market
Australia is renowned globally for its wine – but it wasn’t always this way. In the grand scheme of things, the Aussie wine market is actually quite youthful.
Things kicked into gear in the late 90s, when international demand for Australian wines accelerated. In response, new vineyards seemingly popped up overnight, and overseas exports tripled in volume between 1991 and 2007 (largely thanks to North America and the UK).
But, it was actually Penfolds winemaker Max Schubert who thrust Aussie wines from the consumer to investment level when he developed ‘Grange’ – the first Aussie wine built to age like the storied investable wine in France.
Caption: Sourced from Penfolds - Max Schubert with an early release of ‘Grange’.
When it comes to tracking the Aussie market, it can get a little difficult. Liv-ex – the industry standard for wine indices – doesn’t track the Australian market on its own. But luckily, some of their competitors do.
Alti Wine Exchange has created a wine index based on ten of the nation’s most influential vintages between 2000 and 2012. And although the market got off to a rough start, by the mid-2010s investment-grade wine from Australia was beginning to flex its muscles. It is up nearly 70% in just six years – annualised returns of approximately 12%. (It’s worth noting this index does not include 2023, which has seen a slowdown across all wine markets).
Source: Alti Wine Exchange
All up, Australia produces some of the world’s most delicate and revered wines. Its massive export numbers, huge market and average value per bottle are impressive, despite the industry’s youth. Although regions like the Barossa Valley are cemented as a global hub for fine wine, investors are yet to fully capitalise on the market’s potential. But as more investors enter the market, supply will continue drying up and the prices of top Australian vintages will likely continue their excellent growth.
The best Australian vintages money can buy
Australian vintages since 2012 – particularly from the Barossa Valley region – have been consistently exceptional. 2011 was the last year that received a score of below 90, due to a season filled with unusually cold weather and high rainfall.
Some of the best Australian vintages in the past two decades include:
- 2005 received an impressive average rating of 96 from Winespectator. Perfect growing conditions produced a consistent yield with extremely rich, ripe yet balanced flavours. Standouts included the 2005 Henske Hill of Grace, and the 2005 Torbreck The Laird.
- 2012 is known as one of the strongest South Australian vintages, with critics grading it a 95. Of particular note from this season is that yields were quite low – but red wines that were harvested possessed incredible depths of flavour. Paired with the innate scarcity, releases like the 2012 Penfolds Grange Bin 95 are worth close to $1,000 per bottle.
- The 2017 season was relatively long, resulting in higher yields and a significant increase in rainfall. This led to excellent Riesling, Chardonnay, and Shiraz wines, while other varieties suffered. Some of the best bottles were the 2017 Rockford Basket Press Shiraz and the 2017 Torbreck Runrig Shiraz.
- 2018 was a decent year for Australian vintages, but an exceptional one for red wines in South Australia. The season started off quite hot which caused some growing difficulties for vineyards and a reduction in yields. However, the grapes were eventually able to ripen as the season went on, resulting in reds with a rich flavour and lengthy drink window. The 2018 Penfolds Grange Bin 95 has an unheard-of perfect 100-point score from eight of the world's top critics.
Case study: 2017 Rockford Basket Press vs 2018 Penfolds Grange
Australia, and especially South Australia, is renowned for producing consistently stunning and high-quality Shiraz. The nation is responsible for nearly 90% of all Shiraz bottles on the market.
Caption: Sourced from wine-searcher
So, to really break down the investment potential of Australian wines, let’s analyse two top-rated Shiraz bottles from their respective vintages: the 2017 Rockford Basket Press and the 2018 Penfolds Grange Bin 95.
2017 Rockford Basket Press
2017 was a superb year for red wines – particularly Shiraz varieties, and the Rockford Basket Press might just be the best of the lot. The Barossa Valley wine has only been around for a little while, yet has already cemented itself as an iconic Aussie wine. It was rated 97/100 by prominent sommelier James Suckling, and all the signs point to it being an excellent option for long-term holders, so long as they can resist the urge to drink it!
- According to United Cellars, it is the #5 most collected wine in Australia.
- James Suckling declared the 2017 Rockford Basket Press as “drink or hold”, which matches up with other critics suggesting the vintage will age incredibly well.
- Previous Rockford Basket Press Shiraz Vintages have consistently risen over time. Take the 2009 bottle, which has appreciated 21% since January 2022 (a solid return of 10.1% per year amid a relative economic downturn).
Caption: 2017 Rockford Basket Press arriving at TradingGrapes secure, climate-controlled and insured facility
Rockford Basket Press is inherently scarce due to the tiny quantities produced each year, however, scarcity is yet to fully set in for this bottle, with wine-searcher suggesting its availability has only just dipped since 2022. It’s also worth remembering yields for this season were a little higher, so it may take longer than usual for scarcity to come into play.
Caption: Sourced from Wine-searcher
But the consistent popularity of Rockford Basket Press Shiraz– it is in the top ten of Aussie wines – suggests that as the total supply continues to drop, demand will steadily push up the price of a bottle.
2018 Penfolds Grange Bin 95
The 2017 Rockford Basket Press is a terrific wine and may make a great asset for forward-thinking wine investors. But the undoubted king of Shiraz in Australia is the Penfolds Grange line of vintages – and the 2018 edition might just be the best of the lot.
It boasts an unprecedented 100-point score from eight of the world's top critics.
And if you’re worried about its long-term viability, don’t be. The drink window of the 2018 Penfolds Grange stretches from 2030 until… 2060+. When it comes to long-term investment-grade wines, it doesn’t get much better than this.
The Penfolds Grange Bin 95 is what’s known as a “blue-chip” investment wine. This basically means investors consider it a stable play – it’s an expensive asset with a long history of excellent performance and consistent demand. You can think of it like buying Apple on the US stock market.
It’s already performing incredibly well, increasing in value from $637 on release in 2021, to $1,004 today. That is a 36.5% increase in 2 years! (Or 18.25% per year.)
Remember, Penfolds Grange vintages tend to last 40+ years – bottles from the 1970s are selling at auction for up to $5,000. And if we look even further back, a rare 1951 Grange holds the record for the most expensive Australian wine sold at auction, with a single bottle selling for over $140,000 in December 2021!
Known for its track record, the 2018 Penfolds Grange Bin 95 is shaping up to be one of the most popular investment-grade bottles of wine – and it’s already the #1 most-searched-for Shiraz on wine-searcher.
Caption: Sourced from Wine-searcher
Although the wine’s availability is currently high – due to investors cashing in on their early profits since release – it’s fair to assume that the rising demand for this year’s Grange is set to continue. Even with a conservative 6% annual increase, a bottle of this wine could be worth over $3,000 dollars in a few decade’s time.
Summary
Australia has been producing high-quality wine for decades now, but the international scene only really started to notice in the 1990s. But take notice they did, as the nation quickly cemented itself as one of the world’s top producers, home to some of the most stable and highly sought-after bottles.
It’s impossible to think of Australian wines without thinking of Shiraz. Although the variety is said to originate from the town of Shiraz in Iran, it is now synonymous with Australia and the industry’s best bottles – like the 2017 Rockford Basket Press and the 2018 Penfolds Grange.
Australia’s rising status in the wine industry isn’t slowing down anytime soon. International investment interest is well-positioned to rise as investors look beyond iconic “blue-chip” Penfolds to other top-quality wines from the region.
Australia may be 20% desert, but we’re not complaining if the remaining 80% is a lucrative blend of historic wine!
