How you can become a fine wine investor

Wine has been one of the hottest investments over the last decade. Over the coming weeks we'll be running a wine investing series, with top tips to help if you want to win a slice of the action.

This week: your practical guide to investing in wine

Has there ever been a better time to be an investor in wine? Over the last ten years, investors in the finest vintages have watched prices absolutely sky-rocket.

Some have called it the investment of the decade. Others have celebrated 800%-plus gains on their treasured purchases.

What on earth has happened to make wine such a valuable investment, I hear you ask? Emerging markets, that's what.

In the Far East they're drinking down fine wine by the bucket-load.

And because there is only ever a limited supply of each vintage, prices have been sent booming upwards.

Over recent years the rises have been heavily pronounced, and the Lafite Rothschild 1982 vintage carved its place in the wine investing annals by rising ten-fold since the turn of the century. In 2000 it was worth £2,600. Now it sells for £25,500.

But there are other exciting fine wines about, too. Plenty, in fact.

Take the Lafite Rothschild 2002 vintage, for example. In the last six months alone, its price has jumped 70%.

Or the Mouton Rothschild 2004, which has gained 48% in six months, going from £1,550 last autumn to £2,300 today.

Even the lesser-known brands, such as the Duhart Milon, have done well. The 2006 Duhart was £340 per case in September last year but now changes hands for more than £450.

Prices for the most popular wines are maturing at near 100% a year. Sounds slightly better than 1.85% on the old online saver, doesn't it?

Unfortunately, it is not your fool-proof ticket to being a millionaire though.

Wine investing isn't for the tee-totaller, no matter how juicy the returns seem. It helps to enjoy a glass of red, and you'll need a sizable amount of disposable income available to make the venture work. Wine investing should only ever be seen as one of a number of strands in a portfolio.

But there's no need for pessimism just yet. Over the coming weeks we'll be running a wine investing series.

In each installment we'll ask industry experts to recommend two wines that are worth your cash - one will be a hotly-tipped, premium high-riser; the other a lesser-known (and much cheaper) dark horse.

Before we do, though, read our essential step-by-step guide to investing in wine.

First things first... how does the market work?

What determines the value of a wine? The short answer is Robert Parker Jnr, the world's most powerful wine critic. What he says goes. The US commentator has a history of calling top wines before his peers.

Indeed, it was Parker (pictured, right) that tasted the 1982 Lafite Rothschild vintage and tipped his hat when all around him baulked.

Parker scores wines out of 100. If a vintage tops 96, you can be sure it will soon be in high demand – and its price will shoot through the roof as a result.

You can check Robert Parker's scores at his website: erobertparker.com

Of course, a number of other opinions count, as does the balance of supply and demand.

Once a wine is out there to enjoy, its price reacts to drinking habits: every time a bottle is opened, there is one less for the world to enjoy. A Chateau can only produce a finite number of bottles each year, and these cannot be replenished. By way of example, the Chateau Mouton Rothschild made approximately 13,000 cases in 2008.