Investors in wine urged to seek advice

Investors considering putting money into vintage wine have been urged to get advice from someone whose bona fides are known to them.

The warning from the Irish Wine Development Board comes as an Amsterdam firm has resumed targeting potential Irish investors. It is thought the company, accused of selling wine at inflated prices, may be using the Eircom register of shareholders and other share registers.

People are receiving unsolicited marketing material which claims returns of up to 30 per cent a year can be made from investments in wine. Mr Peter Dunne, a director of Mitchell & Son, Dublin, said a friend of his received an unsolicited invitation last week to invest in wine from a firm called Liquid Gold, with a PO box in Dublin. Mr Dunne was "amazed that they are still plugging away at the Irish market. They wouldn't be doing it if they weren't getting some response". He said: "They are selling wine at sometimes five times the price I can get it for you. They are selling a lot of good names but bad vintages or bad names from good areas. The real way to buy wine is to do it with someone you know."

Mr Dunne said he had been contacted by people who had invested £5,000 (€6,353) to £15,000 through Vintage Wines. "One group of men was investing £27,000 until I suggested they pull out."

Mr Brendan Healy, who came close to investing £2,200 last year in a case of St Emilion he later learned was worth only £200, said two acquaintances of his received invitations to invest in January. Both were investors in Eircom, he said.

People who respond to the Liquid Gold missive are then contacted by Vintage Wines, with an address in Amsterdam. The company offers to buy wine on behalf of clients, arrange insurance and storage in a London warehouse, and sell the wine when the customer wishes to take their return on their investment.

Mr Healy opted to buy a case of Chateau Milon Saint-Emilion Grand Cru 1994 for £2,235, with five years' storage and insurance included in the price. After he sent the cheque but before it was cashed, he conducted some research and decided the wine was worth only £200. He cancelled the cheque. Mr Michael Moore, a manager with Vintage Wines, said: "Anyone can have their own opinion as to what a case of wine is worth." He said his company matched up people seeking certain wines with people selling those wines. "People have made profits from our company. We are not a bad company."

The company was based in the British Virgin Islands for tax reasons and he was not aware of any corporate structure registered in the Republic. The company bought and sold wine all over the world, he said. It had some 1,200 clients in the Republic and had returned profits of about £500,000 to them.

"There's no disputing that wine can differ in value," he said. "We have no problem with people having their own opinion as to the value of wine."

Mr David Dillon, a director of the Irish Wine Development Board, a trade organisation which promotes wine, advised people to be "very cautious" when spending large sums on wine and to be sure the firm they were dealing with was well established and well regarded.