Investing in whisky
We all know someone who dug out a dusty old bottle of Scotch from the back of their shelf, sold it at auction and made a killing. Due to the limited nature of whisky, it has always been a sought-after item for collectors.
One of the largest whisky collections in the UK is located just around the corner from Caskshare HQ and is comprised of almost 3,500 bottles of amber gold. In 1970, Claive Vidiz, a whisky enthusiast in Sao Paulo, Brazil, began to seek out and purchase Scottish whisky. Over 35 years, he amassed these 3,384 bottles which now reside at The Whisky Experience on the Royal Mile, Edinburgh.
Although whisky collecting has been going on for decades, it has never been more lucrative. Demand for rare whisky has surged over the last few years with interest in old bottlings and single cask bottlings reaching “fever pitch”, according to a study by Bordeaux Index. The Bordeaux Index also stated that “whisky has emerged as a good asset boasting strong capital preservation and a high level of protection against inflation.”
During the 2010s, whisky was noted as the best-performing asset class – increasing in value by 428 percent over this period. In comparison, fine art increased by 75 percent and wine increased by 137 percent.
What has led to this increase?
Whisky by its very nature is an appreciating asset. By law, Scottish whisky must be left to mature for a minimum of three years. Almost always, the liquid is left to mature for longer than this and as we know, time equals money. As a cask of whisky matures, the level of liquid also decreases due to the Angles Share. This further results in the remaining liquid holding a higher value.
But what has led to this drastic increase in value? A combination of heightened demand from overseas – specifically China, USA, and Europe – along with note-worthy casks selling for record amounts. This highlights the lucrative nature of rare whisky to alternative investors which again leads to increased demand. Back in June of 2022, a 1975 Ardbeg cask was sold to a private investor in Asia for a record-smashing £16 million.
In the post-Brexit world, there are difficulties in shipping rare bottles and single cask bottles outside the UK. This has created a hunger in the global market which again, continues to drive demand for limited bottlings
Where to start?
If you were thinking of dipping your toe in the whisky investment pool but don’t know where to start, here are a few pointers.
Start small. Although whisky is a strong investment choice, you are not guaranteed to make money at auction. There are a lot of bottles of whisky which are positioned as an investment that may not retain their value.
Only purchase what you can afford and at a price range that, if your investment doesn't work out, you can always open the bottle and share it with friends guilt-free.
There are a lot of affordable bottles of whisky that make a good investment. Due to their limited nature, single cask bottles are often a sure bet for investment. Unlike single malt, single cask whisky is from one cask so the bottles are far more limited than other releases. Often, casks yield less than 250 bottles so single cask releases are good to bank on.
When choosing your investment bottle, look for up-and-coming or prolific distilleries. Another affordable bottle would be a distillery's inaugural release. There will never be another first release from a distillery so these bottles can never be reproduced.
Again, the most important thing to remember is never spend what you can’t afford to lose. Collecting and investing should be fun and often, you might not make enough profit to elope to Hawaii, however, looking for that next rare release can be very rewarding.
For more information about whisky investment and how to get started, feel free to contact us.
Citations
The Diageo Claive Vidiz Whisky Collection: Scotch Whisky Experience
The Times & The Sunday Times