Australia’s Icon

With Grange as its foundation, Penfolds has built the country's most respected winery

Excerpted from the Dec. 15, 2014, issue

As the setting sun paints the sky orange over Gulf St. Vincent, the lights of downtown Adelaide flicker against the picture windows of Magill Estate restaurant. In a decanter on the sideboard, Penfolds Grange Hermitage 1955—the fourth vintage made of what has become Australia’s icon wine—glows a youthful ruby.

The restaurant, on the site of Penfolds’ 19th-century vineyard and winery, offers the most lavish dining experience in Adelaide, a city with more than its share of excellent dining options. A tasting menu with matching wines hits many highlights, both vinous and culinary. The cutting-edge cuisine of chefs Scott Huggins and Emma McCaskill is catnip for the winery’s classics, all of which are offered on the wine list in an impressive range of vintages.

During my recent dinner there, chief winemaker Peter Gago pours, among other rarities, the 1990 Grange. The wine clearly shows why it was Wine Spectator’s Wine of the Year in 1995. A towering red, it cloaks its power in a plush, silky texture that somehow manages to dance lightly through a long finish, trailing blueberry and spice character. It wraps nicely around a grilled slice of locally grown Wagyu beef.

But the evening’s climax is that 1955 Grange, its core of cherry and fig flavors gaining complexity from spice, leather and licorice notes. A pungent Italian ewe’s milk cheese called Canestrato, produced by celebrated cheesemaker Casa Madaio, hardly fazes this mature but still vibrant 59-year-old Shiraz.

The food is spectacular, the wines even more so, amply demonstrating why collectors scramble for available bottles of Grange, and why Penfolds’ best wines deserve their place in the wine world’s gallery of stars.


Cellar 20, part of the 125-year-old Magill Estate winery, includes a long tunnel where floor-to-ceiling racks display thousands of bottles, stacks of every vintage of Grange ever made beginning with the first trials from 1951. At the end of the tunnel stands the old desk and other memorabilia of Max Schubert, the winemaker who invented Grange and in the process put Penfolds—and Australia—on the international wine map.

The Grange story begins in 1948, when the winery sent Schubert to Spain so the young assistant winemaker could study Sherry production. On a side trip to Bordeaux, he visited some of the celebrated châteaus and tasted great old vintages. He saw red wines put into small oak barrels, a practice little known in Australia. Schubert could taste the barrels’ effect on quality, and could not wait to experiment with them in his own winery back home.

Because Schubert had scant access to Bordeaux varieties such as Cabernet or Merlot, he opted to use Shiraz (the Australian name for Syrah). Mature vines of the grape were plentiful, having been grown for more than a century in Australia. Most were intended for fortified wines, though a few wineries had made small quantities of dry reds.

Believing that he had seen the red wines in Bordeaux fermenting in barrels (they weren’t), Schubert finished the fermentations of his 1951 experimental batches in five American oak hogsheads (slightly larger than traditional Bordeaux barriques). Then he racked the wines into the rinsed-out barrels to age. As a control, he sent the same material through a traditional open-tank fermentation and aging in 1,000-gallon oak vats.

Though it did not resemble Bordeaux, after two years the barrel-treated wine showed remarkable structure and depth. Finishing the fermentation in barrel had produced a creamy texture and deftly integrated the oak flavors.

“The overall flavor was much more intense than the control, and for a big young wine, the balance was superb,” Schubert recalled in a 1979 speech at a wine symposium in Canberra, the national capital. “Gone was any suggestion of raw wood, and a complete wine was emerging with a full, buoyant, almost ethereal nose of great intensity and a palate full of rich flavor and character.”

Encouraged, Schubert made commercial quantities of the wine in 1952. He called it Grange Hermitage. The name combined the title of Penfolds’ vineyard at Magill Estate (Grange) with Hermitage, the local synonym for the grape, referencing the French appellation in the Rhône Valley renowned for Syrah-based wines. He continued making the wine in subsequent vintages and, pleased with how it improved in bottle, he decided to present it to the public in 1957.

The Penfolds board gathered friends and respected local wine figures in Sydney for a tasting. It was a disaster. In later years, Schubert delighted in quoting some of the brickbats. “A concoction of wild fruits and sundry berries with crushed ants predominating,” said one. “Schubert, I congratulate you,” said another, “on a very good, dry Port, which no one in their right mind will buy, let alone drink.” Another wanted to buy it and use it as an aphrodisiac, on the theory that the thick, rich wine would raise his blood count to twice the norm when the occasion demanded.

Not everyone hated it. U.S.-born surgeon Dr. Max Lake—who only a few years later, in 1963, would found Lake’s Folly in Hunter Valley, Australia’s first boutique winery—bought several cases.

The board pulled the plug on the project. “The main reasons given were that I was accumulating large stocks of wine which to all intents and purposes were unsalable, and that the adverse criticism directed at the wine was harmful to the company image,” Schubert recalled. “It appeared to be the end.”

However, with the quiet permission of Jeffrey Penfold Hyland, the family member who managed Magill Estate, Schubert made small quantities in 1957, 1958 and 1959. Using only older barrels compromised the results, but they were good enough to bottle as Grange Hermitage. And as the early vintages matured in bottle, critics started to come around. They found more grace and elegance than they expected. Finally, the directors relented, and urged Schubert to resume.

Grange (the “Hermitage” was dropped in 1989 after European authorities banned any use of a French appellation name on wines for sale there) has realized Schubert’s highest hopes, and the wine still embodies his values. It continues to be made using Shiraz vines at least 60 years old and grown in South Australia, following the fermentation and aging regimen Schubert perfected. Penfolds’ own Kalimna Vineyard in Barossa Valley provides the core element in a blend that uses grapes from as many as 20 sites, including Magill.

Grange’s consistency from vintage to vintage compares favorably with any of the world’s other high-profile cellarworthy wines. Current vintages are priced at $850 a bottle in the United States. In 2004, a single bottle of the experimental 1951 sold at auction for $37,755, a record for Australian wine.


For all the glory of Grange—and one or two other historic entries, such as the legendary 1962 Bin 60A, which many count as Australia’s greatest wine ever—the expansive Penfolds roster centers on wines priced at $24 to $69. Yet all of the wines, from the collectible to the experimental to the mass-market bottlings for everyday drinking, reflect a distinct DNA. When much of Australia seemed to be ramping up ripeness and alcohol levels, Penfolds steadfastly refused to go along, aiming for balance without sacrificing the clarity of fresh fruit character. Even Grange, as majestic as it is, hovers around 14 percent alcohol, well below the average for most luxury-priced Australian Shiraz.

Penfolds achieves this remarkable mix of character, consistency and value in part from using primarily its own vineyards: Among its assets are 1,750 acres of estate vineyards in Barossa alone, plus nearly 1,000 in other parts of South Australia. It also has access to 2,000-plus acres belonging to Treasury, its corporate owner, and hundreds of independent growers scattered throughout South Australia.

Although Treasury would not confirm case-production figures, published industry estimates hover around 1.5 million. A Bank of America Merrill Lynch analyst earlier this year valued Penfolds (separately from Treasury) at US$2.8 billion.

Continuity has played a big part in its success. After Schubert, only three other chief winemakers have run the show at Penfolds, shaping the style and portfolio with an eye to the lessons of their predecessors. Don Ditter, who came aboard as a lab assistant in 1942, took the reins from Schubert in 1973. (Schubert died in 1994; Ditter passed in 2015, a year after this article was published.) John Duval replaced Ditter in 1986, departing in 2002 after 29 years to start his eponymous label. To follow Duval, Penfolds promoted Gago.

Gago, 57, was born in Newcastle, England, and moved with his family to Melbourne at the age of 6. After earning a bachelor of science degree at the University of Melbourne, he taught high school mathematics and chemistry in the 1980s before returning to university to study enology at Roseworthy. In 1989, Penfolds hired him to work on sparkling wines. He moved on to red wines in the 1990s. His natural ability to engage audiences made him a prominent spokesman for Penfolds even before his promotion to chief winemaker.

“There’s this continuity from generation to generation, and we all have a dedication to it,” says Gago.

This reverence for history at Penfolds stems from the company’s origins. The saga began in London in 1838, when Christopher Rawson Penfold earned his medical doctorate at St. Bartholomew’s Hospital, and he and his wife, Mary, migrated to the free colony of South Australia. They paid £1,200 for the 500-acre Mackgill Estate outside Adelaide, where they set up their home and medical practice. Around the humble cottage, the land sloped gently up the base of Adelaide Hills. They planted Grenache vines there and made their first wine in 1844, a Port-like bottling that the good doctor prescribed as a tonic for anemic patients.

The property soon became South Australia’s prime source for a wide variety of wine grapes. By 1890, Penfolds & Co., a partnership involving Mary Penfold and her son-in-law Thomas Hyland, claimed to be producing one-third of all wine in South Australia.

Although German and Italian settlers made some dry wines to sell mostly to their own demographic, fortified wines dominated the country’s wine industry into the mid-20th century. But things started to change in the 1940s, when Australian servicemen returned from World War II with a taste for European table wines.

By the end of that decade Penfolds had assembled a collection of vineyards suitable for dry reds, buying the Auldana vineyard and winery adjacent to (the renamed) Magill Estate, vineyards in McLaren Vale and New South Wales, and Kalimna Vineyard in Barossa Valley, at the time the largest vineyard in South Australia.

The tide truly started to turn toward table wines in the 1960s. In an era of seat-of-the-pants winemaking, Schubert insisted on clean wines with a focus on ripe flavors and freshness of fruit. Even today, vineyards destined for Penfolds’ wines are among the earliest picked in coastal South Australia. In 2008, for example, most of the grapes for the label’s best wines were safely fermenting well before a weeks-long heat wave put the brakes on a promising vintage for most vintners. In early April, when I visited with winemakers at Penfolds’ main winery at Nuriootpa in Barossa Valley, most of the ferments were already finishing up. Elsewhere, more than half the 2014 vintage was still out on the vines.

Ditter introduced a system to triage every lot of grapes from all of Penfolds’ vineyard sources by both taste and chemical analysis. This evaluation and classification continues with every tank in the fermentation shed and every transfer to barrel, directing the grapes and resulting wines to the appropriate bottling.

“Around 1970 we got more analytical about how we did things,” Ditter recalled in an interview for this article near his home in suburban Sydney. “All the winemakers together tasted all the vineyards. Putting the sources into a hierarchy helped with the continuity of everything.”

I saw the system at work at the Nuriootpa winery, which can ferment more than 1 million gallons of wine at a time, much of it destined for Penfolds’ low- and moderately priced bottlings. Gago and senior red wine maker Steve Lienert hold their glasses under a spigot to draw a taste. “This is a vineyard in Port Lincoln,” Lienert says. “That should make it into Bin 9 [a new mid-market Cabernet].” I taste pure fruit and supple texture.

A Cabernet from Penfolds’ Koonunga Hill vineyard is thicker, richer, bursting with great fresh fruit. “That’ll be at least [Bin] 389,” says Lienert, referencing the more expensive Shiraz-Cabernet blend popular with collectors.

Another tank holds a Cabernet from Greenock, on the western slopes of Barossa. Sandy tannins underlie fresh, ripe flavors with a savory undertone. “That looked really good when it came in,” notes Andrew Baldwin, another red wine specialist. “Could be 707 [the $350 Cabernet].” (For a rundown of all the “bin number” wines, see “Decoding the Penfolds Bin Numbers.”)

The same eye to sorting for character applies in a separate cool room holding stacks of barrels fermenting Chardonnay. One barrel is all pear and spice, the next grapefruit and kiwi, a third crisp and refined; they offer different profiles to blend into a range of complex wines. The winery’s scale is massive. The barrel halls hold 40,000 casks from 36 different coopers, mostly for reds. Because 2014 is a relatively small vintage, there’s actually room for 30,000 more.

In his tenure as chief winemaker, Duval introduced several new icon-level wines. RWT (the initials originally indicated “red winemaking trial”) created an extra-rich style by aging Barossa Shiraz in French oak barrels (as opposed to Grange’s use of grapes from all over South Australia and aging primarily in new American oak). Duval also is responsible for developing Yattarna, a Chardonnay made from cool-climate grapes in a steely style to gain depth with age.

Among other top wines relying on multiple vineyards, the St. Henri Shiraz bears special mention. Created by Penfolds winemaker John Davoren in the 1950s at the producer’s Auldana Cellars site, St. Henri blends grapes from cooler areas such as Adelaide Hills, Coonawarra and Eden Valley, aged in neutral vats. All fruit and spice on release, gaining loam and leather notes and textural nuance with age, it was conceived as and remains a stylistic foil to Grange.

Not all of Penfolds’ top-tier wines blend grapes from various sources, however. The Magill Estate Shiraz uses only the 12 acres of Shiraz remaining in the original vineyard below the winery. Other high-end bottlings get even more specific; an occasional release, Block 42 Cabernet Sauvignon, comes from a few prized rows of Kalimna Vineyard’s 130-year-old Cabernet vines.

The tier below the icons, known as the “bin range,” tops out at $40. The lineup includes an Adelaide Hills Chardonnay; an Eden Valley Riesling; a Barossa Shiraz; a Barossa Grenache blend; the new Bin 9 Cabernet; and the soft and generous Bin 2 Shiraz-Mourvèdre. These well-made current-vintage wines frequently display depth and complexity. They accurately reflect their varietal and geographical origins and demonstrate how Penfolds puts serious thought and effort into every wine it produces.


Although Penfolds can trace its founding to a family homestead, it now sails under the flag of one of the biggest wine companies in the world.

Treasury Wine Estates produces more than 31 million cases, including labels such as Beringer, Chateau St. Jean and Stags’ Leap Winery in California, and Cavaliere d’Oro in Italy. Among its 36 Australian brands are Wynns, Rosemount, Lindemans and Coldstream Hills. All of them also started as family-owned, independent, often small wineries, until bigger businesses swallowed them up, eventually consolidated in the present company.

Penfolds remained in private hands until 1976, when the founding family sold controlling interest to Sydney-based brewer Tooth and Co. Through a series of mergers, acquisitions and spinoffs involving five different corporate owners, Penfolds ended up as Treasury Wine Estates’ crown jewel.

After 40 years of corporate consolidations, Penfolds has managed to hold on to more autonomy than other major labels in the Treasury portfolio. It’s turning out an impressive range of abiding and innovative wines that have maintained their identity through decades of changing ownership. There’s nothing else in the world quite like Grange, and it’s still made pretty much the same way it was when Schubert perfected it in the 1950s.

In the introduction to his 2015 Australian wine guide, prominent Australia wine writer Jeremy Oliver worried that a big foreign corporation could buy out Treasury and sell off the brands piecemeal. Citing the importance of labels such as Penfolds “and the roles they play for Australian wine at large,” Oliver wrote: “I am very keen to see the ownership of these brands remain in the hands of people who respect what they stand for and have the talent, intent and resources to ensure they maintain their integrity and leadership roles.”

Penfolds clearly taps into a deep well of Australian pride, the result of its long history of innovation and excellence. From its modest beginnings to the worldwide acclaim accorded Grange, the company’s success has been built on a broad foundation of terroir and talent. Generations of investment and thoughtful innovation have created not only a profitable and respected company, but an icon of Australian wine.