WINE buffs the world over refer to their favourite tipple in terms of its complexity, nose or body. For them, vintage and grape variety are the most important characteristics when choosing a bottle. Others, however, view wine as the ultimate in liquid assets and focus instead on its monetary value and return on investment.

Investing in wine can be fun and a crate of Margaux is definitely more interesting to own than a government gilt. But those in the know seek independent advice before buying and are prepared to wait for a return on their investment.

“We began to look into wine investments because of the volatility of the stock markets,” said Marlene Shalton, the managing director of Chambers Morgan James Financial Management, a group of British independent financial advisers. “Investing in wine has very little correlation with equity markets and we recommend it as part of a diversified portfolio,” she said. Shalton added that smart investors will tie up no more than 10% of the value of their portfolio in wine.

Shalton’s company deals with a wine investment firm called Premier Cru. “Some people have seen the value of a typical portfolio double over the course of three years,” she said.

Premier Cru’s website boasts 19.52% per year average growth for its managed wine portfolio, which it says outperforms the FTSE All Share index, managed unit trusts and bonds. According to the website, £10,000 (€14,805) invested in its fund in 1974 would have been worth £1.47m by December 2003.

Others warn that matters are not so straightforward. One sceptical website, Investdrinks.org, warns investors about a proliferation of wine-related investment scams, and says that most wines show modest growth. It points out that looking at wine and stock market indices side by side is not a fair comparison, because unlike wine, shares also pay out dividends. Investors also need to factor in the cost of storage (about €15 a case per year), insurance and commission on selling — which can be 10% with some investment companies.

“If it doesn’t work out you can always drink it,” said Greg Alken, a sales and marketing director with Febvre, a Dublin-based wine supplier. “In Ireland it’s a small market. You need to know someone with good contacts in order to access international demand for rare wines, and like any other investment, you have to have a way of selling it in mind when you are buying it,” he said.

David Dennison, the proprietor of the Waterford Wine Vault restaurant and a supplier of fine wines to the trade, said: “There is a danger if you don’t know what you are doing. It’s a bit like going to Turkey to buy property. You need advice and you need to be disciplined. But it is possible to make money.”

By going through a well-known middleman to buy your wine, the costs go up by about 15%, but you are minimising the risk, added Dennison. “They will know what they are doing,” he said.

One advantage of wine as an investment is that it is exempt from capital gains tax because it is considered a “wasting chattel” or depreciating asset by the Revenue Commissioners. “Also, investing in a managed wine fund will mean you are exempt from paying Vat, which you would otherwise pay, and the wine will be held abroad in a bonded warehouse to avoid duties,” said Shalton.

For those who choose to invest themselves, it is essential to pick the right wines and also to pay for adequate storage.

“First-growth Bordeaux are the best,” said Dennison. “This would include the big names like Château Margaux, Petrus and Mouton. You pay much more for these, but you minimise the risk — they will always hold their value.”

Top Burgundies and Rhone wines are also good bets, but outside of France, the risks become greater. “New world wines don’t have the same appeal,” said Dennison. “But wines like Hill of Grace from Australia’s Eden Valley wouldn’t be a bad investment.” California’s Opus One and Australia’s Penfolds Grange should also do well, say the experts.

The wine’s vintage will also affect its value. First-growth 1996 Bordeaux wines can fetch upwards of €5,000 per case. Outside France, other vintages that are likely to rise in value are 1999 Tuscany, 2001 Rioja and 2001 Ribera del Duero.

A popular way for people to invest in wine is to buy “en primeur”, which is likened by some to investing in “wine futures”. This means that you buy the wine at a cheaper rate before it is bottled and sold on the open market.

A case of 2004 Château Gazin from Pomerol can be picked up for about €290 en primeur, though this is before duties and cellar costs. But there are dangers. “Buying en primeur, you could end up getting sucked into unreliable sources. They may end up selling you their second, third or fourth choices,” said Dennison.

Investors can also buy into production. Noble Vine, a Galway company, is offering Irish investors the chance to buy a row of vines in the Languedoc-Roussillon region of southern France, traditionally a “plonk” region but now seeing improvement, for as little as €750.

“Wine is probably more enjoyable as a hobby than an out-and-out commercial venture,” said Alken. “It would be a mistake to rely upon wine as a prime investment. With wine, it shouldn’t be a mission to drink more, but to drink better.”