Investors toast Hungary's vineyards

BRITISH investors are among a buccaneering band of entrepreneurs who have sunk vast amounts of capital into a wine region of Hungary once praised by a French monarch for producing 'the wine of kings and the king of wines'.

The wine in question is Tokay, a dessert tipple of incredible nuance and sweetness whose name and reputation virtually vanished under the austere years of communism. Now it is bouncing back worldwide as modern production methods and capital injections turn the region where it is made into a who's who of wealth.

British private investors Hugh Johnson and Peter Vinding-Diers have poured some £3.5m into the Tokaji Wine Company while Bodegas Vega Sicilia of Italy has invested £7m in recent years. More than £80m of foreign cash has flowed into the region, 160 miles from Budapest, in the past decade.

About 65% of the annual wine yields go to the US, Britain, Germany and France and the region is aiming to rival Sauternes in France, producer of such legendary and swooningly expensive dessert whites such as Chateau d'Yquem.

'We've only used up about half of our marketing potential while Sauternes has used up 100%,' said Janos Arvay, a winemaker whose estate is the second largest in Tokay.

Hungarian wine is equated with many with being a student's ticket to an instant hangover, a question of quantity over quality. But Tokay is extolled by the world's top wine writers and the signs are that investments are beginning to pay off.

Just as the German riesling grape is enjoying a renaissance, so analysts believe the wine so beloved of King Louis XIV of France is ready for a makeover.

Hans Gehring, a German investor in the region, said: 'For eight years, I didn't make a profit but the corner has now been turned. If you keep a bottle of the finest Tokay in your cellar for 20 years, you'll get a better return on it than any mutual fund.'