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MICHELE NORRIS, host:

One of the most famous names in wine is Rothschild. And in a speech last night, the head of France's legendary Mouton Rothschild Vineyard reminded her audience of something that might seem obvious. Wine is for drinking. Baroness de Rothschild said she's worried too many people are investing in wine rather than enjoying it. And she's concerned that this will result in a speculative bubble.

Joining us is Peter Lunzer. He's an adviser and director at the London-based Wine Investment Fund and Peter, I assume the baroness isn't talking about buying two buck chuck or hording futures on hordes of table wine.

Mr. PETER LUNZER (Director and Wine Adviser, Wine Investment Fund): No. She's obviously talking very much about the wine that she produces, the top-end of her stable, the Chateau Mouton Rothschild and the many other Bordeaux Cru Classes that's fit into that same category.

NORRIS: Are her concerns well founded?

Mr. LUNZER: I think that historically, people, through their wine merchants, have always been buying wine futures or just generally wines that they assume one day they may drink. And as those wines get older, become more mature - and very often, the global markets - causes the prices to rise. The owners of those wines very often think, listen, if this is how much it's costing me, perhaps I will sell some and drink some. And so the principle in the past was quite straightforward. You buy four cases, you drink two and you sell two, and the two that you sold from the next four that you buy. The idea eventually is that you drink for free.

Where we have gotten to now is that people have realized that you don't actually have to drink any of the stock, but that holding the right wine for the right period of time can, in fact, produce some quite significant financial returns.

NORRIS: So you have now not just wine collectors, but wine investors. How much of a return can they expect to see on that investment?

Mr. LUNZER: My promise, in a sense, to our investors is that if you give me cash I invested in wine, in a period of five years, I should return probably double what you invest. And this comes back to my slight disagreements with the Baroness de Rothschild. What we're really saying is that if you hold wines while they're going through a phase of being too young and undrinkable, you're not actually affecting the drinking market at all.

And the great wines at Bordeaux very often need between eight and 12 years before they should be put on anyone's table. If you hold back stock during that period, you're not affecting the drinkers, but you are very often witnessing a complete change in global demand. As a wine matures in every restaurant, hotel on the planet, suddenly thinks we should be listing this stock.

NORRIS: Just curious, how much would a bottle of Mouton Rothschild sets you back?

Mr. LUNZER: I literally, 10 minutes ago, bought a few cases of the 1996 vintage and I was paying approximately $400 U.S. a bottle.

NORRIS: So as a wine investor, do you feel at all tempted to break into some of those cases? You must be sitting on quite a lot of wine.

Mr. LUNZER: We sit on thousands of cases. They are in government-bonded warehouses. They are tax-free warehouse system and there's nobody allowed anywhere near the building with a corkscrew. I'm quite fortunate because I also host corporate events, and we very often do serve this type of wine, which proves one very simple thing that wine as an investment or as an asset class, we describe it as an inverse supply curve.

The further you get from the harvest, the less there is to be sold to the market because clients like mine choose to put them on their tables and serve them to their guests. So as the demand seems to be growing, it's a natural result that prices keep rising.

NORRIS: And I guess you'll drink to that.

Mr. LUNZER: Certainly.

NORRIS: Mr. Lunzer, thanks so much for joining us.

Mr. LUNZER: A great pleasure.

NORRIS: Peter Lunzer is the director and adviser at London's Wine Investment Fund.

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