Uncommon Scotch whisky has been referred to as “liquid gold”. Lately, it’s far more than that. Final month a really restricted version, single cask bottle of The Macallan bought at public sale for $250,000, thrice its prime information value. That works out at $10,000 per dram of whisky, over 5 instances its equal by weight in gold.
So, must you think about investing in these rarefied whiskies? There are those that favor to not acknowledge whisky as an funding, however there is no such thing as a doubt that cash is within the minds of collectors. Even when costs sound astronomical, it stays a comparatively small market. Although the info sources range, gross sales of uncommon Scotch bottles have been price over £90mn final yr, based on knowledge from Edinburgh-based company adviser Noble & Co.
High whisky costs have appreciated tremendously in worth over the previous decade. These are virtually all the time single malt whiskies — that means from one distillery — versus blends.
The Uncommon Icon whisky index of the 100 prime public sale traded bottles of uncommon whiskies has greater than quadrupled within the decade to the top of final yr, based on knowledge from Uncommon Whisky 101. However that rise masks a variety of efficiency amongst distilleries. Age issues, however so does branding. An index of Springbank bottles, from the Campbeltown space on the Kintyre peninsula, has finished even higher, up almost six instances in the identical interval.
Essentially the most useful distilleries are these that aren’t round any longer. “Perhaps the very best technique, I’ve informed my shoppers, is to easily cease making whisky,” quips Duncan McFadzean, Noble managing director. Highland distillery Brora went “silent” for almost 4 many years earlier than Diageo reopened it in 2019. The index of its extraordinarily uncommon single malts has elevated by almost seven instances within the 10 years to December.
Historic narratives entice consumers. Campbeltown presents one. Having peaked at 34 distilleries over a century in the past, solely three function at the moment: Springbank, Glen Scotia and Glengyle. Not surprisingly, Campbeltown bottle costs rose 35 per cent yr on yr to September, based on Noble & Co.
Even established fantastic wine retailers supply whisky. “The power to personal outdated and uncommon liquid is in nice demand,” says Matthew O’Connell at Bordeaux Index. Nice wine change Liv-ex too presents uncommon whiskies on its on-line web site.
Though many consumers favor bottles, the cask market has gained in prominence amongst collectors. Casks range in dimension, holding a number of hundred or maybe 1,000 bottles. That allows deep-pocketed lovers to take a position thousands and thousands. One particular cask of 1975 Ardbeg, owned by luxurious group LVMH, bought final yr for £16mn.
Given uncommon casks could be seven-figure purchases, ultra-rich consumers demand a private, unique whisky expertise. Sourcing outdated, uncommon casks of whisky, arranging storage, bottling and supply is the top to finish service supplied by Charlie Beamish, chief government of Beamish Worldwide.
Why a cask? Beamish believes “that is the final word expression of wealth for sure shoppers.” He discovered a cask of Glen Grant from 1949 for one Taiwanese purchaser, the yr that Chinese language Nationalists fled to the island from the mainland. However they’re in “brief provide”, says O’Connell of Bordeaux Index.
Andy Simpson, co-founder of Uncommon Whisky 101 and a collector for over 50 years, at the moment makes a superb residing sourcing casks for billionaire shoppers worldwide. He emphasises that his shoppers purchase to devour, to not make investments or flip their purchases.
Who’re the consumers? Andy Skene each trades whiskies and matures these in particular barrels for his shoppers. “I discover that from my on-line gross sales, the priciest bottles [and casks] go to Asia.”
Some collectors select to have their very own cask made. Donald Farquharson — who rents area to Skene’s Aberdeenshire enterprise — has put some 12- year-old Balvenie, a Highland Scotch, to mature in certainly one of Skene’s casks initially designed for holding cognac. “I used to be intrigued to see what cognac maturation could be like as [it is] not so frequent.”
What are the dangers for traders? With waves of cash coming into the whisky market, some are involved. With bottles promoting for £100,000, and casks for multiples of that, speculators are drawn in. Sort “whisky funding” right into a search engine and a number of other hyperlinks will pop up, some providing 8-12 per cent annual returns (freed from UK capital good points tax) plus free storage and insurance coverage.
That makes Andrew Shirley nervous. He places collectively the Knight Frank Wealth Index which tracks the actions of collectible property similar to fantastic artwork, basic vehicles and uncommon whisky. He worries in regards to the misuse of his index by these eager to arrange and promote whisky funding funds.
“One individual referred to as me about establishing an ETF [exchange traded fund]” utilizing his indices, he complains, stating that each basic vehicles and fantastic artwork did higher than whisky final yr.
One other menace to costs is likely to be added distillery capability. Earlier than 2000 there have been 93 Scottish distilleries working. Since then one other 42 have opened. As many as 59 new distilleries are deliberate, together with one at Campbeltown, based on McFadzean at Noble.
Not all will come to fruition. Furthermore, any “new make” spirit — the distillate from the early phases of manufacturing — requires over three years of ageing earlier than it qualifies as Scotch, and multiples of that point to realize aged standing.
Some distillers would welcome extra provide of recent make spirits, which shot up in value 60 per cent final yr as malt and power costs jumped. Mike Youthful of Ian MacLeod Distillers has hardly ever seen the provision of whisky for mixing so tight in his 20 years within the enterprise.
The traditional buying and selling amongst distillers of aged whisky inventory for mixing functions has diminished dramatically. “Too many distillers need to maintain again their inventory for additional ageing,” he says, within the hope of receiving higher costs later.
Even so, simply shopping for outdated Scotch received’t assure simple success for collectors. Is it price making an attempt, although? “You want to do the analysis and discover a reliable vendor or retailer,” says Tim Nicholson, a personal investor in bottles. However he provides: “Sure, you may make 20-25 per cent every year.”
With no catastrophic collapse in world asset markets, the whisky market seems to be underpinned by demand from a choose group of rich consumers chasing scarce provide.
