Somewhere over the Grange-bow, that’s where you’ll find me!
It goes without saying that 2020 has landed a cruel blow to many Australian households and small businesses. Almost three decades since our last recession, and this one comes wrapped with a 4.3% drop in wages, unemployment rates of 8% and now a decline in property values that some pundits predict could be as high as 10%.
So, while we’re in this financial slump, if the old adage of ‘put your money in bricks and mortar’ doesn’t quite appeal for those looking to invest in something with a better return than the current 0.3% interest rates being so generously offered by the big banks, it seems that there may be an unlikely saviour in providing a sure-fire investment opportunity that may be immune from a global pandemic-induced economic shockwave?
No, it’s not shares or managed funds. It’s not investment bonds or even, as your grandmother might have done in an Arnott’s tin under the mattress. It’s wine. But before you rush out and stock up from the On Sale barrel at your local bottle-o, it’s a particular Australian wine you’ll need to look for: Penfolds Grange to be exact, and not just one bottle, but a range.
And you may just be in luck! The world’s largest auction devoted exclusively to Penfolds is currently set to break a world record for the highest price ever set for a Penfolds Grange set.
Langton’s Auctions has launched its Penfolds Rewards of Patience auction this week, including more than 2,100 individual bottles, 1,500 lots of Penfolds back vintage and a rare vertical set of Penfolds Grange that includes all the existing vintages of our nation’s most famous wine from 1951 to 2015.
This one 64-bottle set is expected to fetch a new world record – almost half a million dollars! So if you have that kind of money in your biscuit tin and are looking to spend it on something that’s going to provide a handsome return – then you can call off the search.
Langton’s Head of Auctions Tamara Grischy says the wines in the Penfolds Rewards of Patience auction are back vintages and not readily available and the absolute majority of vendors and collectors are based in Australia, so she expects the demand to remain high for this auction.
With the first Penfolds Grange vintages becoming rarer and only around 30 complete sets in existence internationally, the price on them has increased by more than 40% in the last three years.
When you consider the sale price on a set that included vintages from 1951 to 2012 in March 2017 was $214,000, and a similar set (vintages 1951-2014) sold for $372,800 in 2019, you can see why investors holding well cellared set of Penfold’s finest, would be rubbing their hands together with glee!
On comparison, returns in the current housing market look rather bleak, despite the November figures showing a rise according to Core Logic’s home value indices. This report shows that Australian house values dropped 2.1% between April and September, and have only now just bounced back by 0.8%. At this rate, the national home value index won’t be back to pre-COVID levels until late 2021 or 2022.
In capital cities, some home values have dropped back to almost pre-historic pre-COVID levels with Perth values similar to those in 2006, Darwin at 2007 values and Sydney and Melbourne at a 2017 value level. Brisbane, Adelaide and Canberra are flying the flag for the property market though, with values rising between 3.2% and a whopping 7% during the last twelve months.
Regionally, there’s good news too – with regional Queensland home values leading a rising trend with a 3.2% lift in the past three months, or 6% over the past twelve months. Tasmania’s regional home values are topping the list at 10.4% in the past twelve months, which is a good return, but still well short of the gains being enjoyed by those lucky 30 or so people who hold full sets of Grange.
I’m not for one moment suggesting that buying a bottle of two of Grange is going to provide a positive return; after all, it’s really only the rare and highly sought-after vintages that are causing the price rises. But for collectors with fat wallets, Grange sets are proving to be a great investment; if you can restrain yourself from uncorking a bottle for a special occasion!