Why is it timely right now to invest in whisky?
I can only describe the unprecedented increase in whisky investment as completely logical and, I might add, a long time coming to fruition. Like many things in life, anything that requires a lot of skill and time to produce in limited quantities will get noticed. The global market for whisky has exploded but the appetite for Single Malt cask strength whisky in limited numbered bottles is insatiable.
The market for investing, collecting and bottling casks from established distilleries in Scotland has finally become a reality. Very few assets appreciate with age in the same way as whisky – even wine is bottled for maturation, while whisky can live in the casks for decades. So while taking a 360-degree view of available, alternative assets your eyes will find whisky casks.
For more than 10 years, people from all over the world have been buying bottles and now they can buy casks. There is no tradable index yet but now, through Cask Trade, there’s a real marketplace for casks and even a cask online auction.
Whisky has grown in value by 564 per cent in the last 10 years – how do you account for that?
Whisky is huge in new markets that quite frankly had their own chosen spirit before whisky – for example, Chinese baijiu, American Bourbon and Japanese Sake. Supply of the rare stuff has barely changed but demand cannot be met. Vast amounts of cask whisky has simply been drunk and although the increase of 564 per cent is based on bottle prices, it mainly comprises of bottles from rare casks. Now, they’re traded like rare wine, Gold and Silver but in smaller numbers.
Our experience is that cask whisky can offer triple figure percentage returns over time. Someone who bought three casks of Springbank for their children in 1993 for £800 each has just sold them (2020) at £32-£39,000 each.
What are the other advantages of investing in something with emotional resonance?
It is an amazing experience. We provide samples of each cask to taste, as well as health checks periodically. Investors can take part in the maturation process by using all their senses. They can even use their passion to choose casks that they prefer such as whisky from a region or a Single Malt with a distinctive taste. We offer a full service including all the way to bottling. You can start small with three- to four-year-old casks at less than £2,000, all the way up to £100,000.
What are the pitfalls? Are there fake batches out there for example?
There have been no fakes yet, but there are sellers of casks who are less than honest with price, ownership and financial projections than others. We’re lucky to be dealing with a commodity that has very few pitfalls. Keep an eye on maturation, check your casks for loss of the angel’s share and if the strength of the whisky is getting too close to 40 per cent or falling below – where it no longer can be called Single Malt Whisky. Also, be careful buying newly made whisky if you do not have a lot of patience.
What advice would you give to those wanting to get involved from scratch?
If you buy casks from a well-established distillery with a good reputation for using good casks there is very little that can go wrong. This journey is not a short-term investment and whisky has significant maturation milestones – 10, 12, 15, 18, 21 years – for a reason. Always try and buy casks from different distillers made over different years, as you would to create a balanced share portfolio. Buy from a reputable stockist, not a broker; buy the whole cask, not a fraction or a share in one. Above all, enjoy the experience, draw samples over the years, attend tastings and even visit your casks when you feel like it.