Success Has Never Been So Sweet – Grow Your Mind and Your Assets with Investable Whiskey
Whiskey to invest. Photo: Elite wine and whiskey.
Scotch whiskey is a symbol of British craftsmanship and tradition, durability and reliability. And although it hasn’t been around forever, it has been recognized throughout history. Its documented history begins in 1494, and tax records at the time show that a brother acquired eight capsules – about 2,500 pounds – of malted barley, “with which to make aqua vitae.”
Although distillation processes may have changed over time, the value of this product has been determined by demand and maturation.
As the worldwide appreciation for whiskey has flourished, people are gradually discovering that limited edition, maturing casks from the world’s most renowned distilleries could provide superior returns to those who wish to keep their investment.
Why whiskey and why now?
The global investment landscape has changed dramatically in recent years, with the general public now having a greater ability to take transactions and invest and trade a range of commodities through online platforms and investment advisers.
Technology has paved the way in a virtual environment for people to discover new and interesting markets that had not been explored before. That said, the past year also demonstrated the global volatility of stock markets and low returns on extremely low interest rates, prompting them to find ways to diversify their asset portfolios.
One way to mitigate the risk of investing is to buy luxury goods that appreciate in price over the years. It became more and more common for people to invest in classic cars, coins, watches and works of art, while other commodities were not seen as opportunities. viable investments.
However, it is now becoming more evident than ever that assets that were previously viewed as mere consumer goods have great potential for long-term investors. One such luxury item is whiskey, which has already been taken away for our own satisfaction, now shows great potential as an investment asset. In addition, whiskey is a tax-free asset that other traditional financial assets do not offer investors.
First of all, like good wine, demand exceeds supply. Collector’s whiskey is also sought after by consumers, so a substantial proportion of any limited edition bottling will quickly become much more limited, as much of it is consumed by dedicated whiskey enthusiasts. The whiskey is bottled after a period of maturation in oak barrels. Legally this is a minimum of 3 years, but in practice most whiskeys are matured for a minimum of 8 years so that they develop their character.
Distilleries will generally have a ‘house style’ represented by mass-produced bottling of a relatively young malt (like the popular Glenmorangie’s 10 Year Old). But they will also have older whiskeys maturing in the distillery, and they can also bottle older whiskeys such as a 15 or 21 year old whiskey.
They can also bottle the product from a particular vintage whiskey cask, or they can offer different expressions of the whiskey such as a “port wood finish” or a “sherry wood finish”, which means that in besides being aged in traditional Bourbon casks, the whiskey has been “finished” with an additional aging period in a port or sherry cask which can impart different flavors.
These different expressions of whiskey and old malts are what interest investors – production is limited, they are highly prized by collectors and consumers alike. Whiskeys from some distilleries are much more collectable than others, so it is important to do your due diligence on what will be desirable in the market in a few years when looking to sell your whiskeys.
As with any investment, it is extremely important to make sure that you are in good hands and that you have access to the best platforms for your investment to thrive. It is therefore imperative that investors have access to well-known distilleries that already have a reputation as an investable whiskey.
This includes famous Scottish whiskeys such as Macallan, Dalmore and Springbank. The collection and rarity of whiskeys is extremely important when considering an investment in whiskey and therefore choosing the right distillery and the age of the cask or bottle is important when making an investment. .
Whiskey market today
Over the past year, there has been an extraordinary 15-20% increase in the values of rare whiskey bottles, ensuring that they have outperformed investments in established alternative assets such as watches, art and cars. .
Over the past two years we have seen some incredible whiskey sales, including the following: An individual bottle of Macallan 1926 broke auction records, selling for £ 1.5million. In 2018, over £ 40.7million of rare whiskey was sold at auction houses in the UK alone. A Macallan cask distilled in 1989 sold for $ 572,000 last year – a record price for a maturing whiskey cask.
The Whiskey Cask Index, a study generated by Cask 88, Braeburn Whiskey and WhiskyStats.net, showed steady growth over the past year, as well as the rate at which casks are appreciating each year being on the rise. This appreciation rate can be attributed to the positive impact of whiskey maturity, as well as a response to growing demand as the supply of whiskey is sold in a more diverse range of global markets.
Whiskey vs other investments
Comparisons are made between the market for whiskey barrels and other luxury products. However, there are many characteristics of whiskey that make it unique. It is therefore difficult to analyze the market without taking into account variable factors, such as the characteristics of the barrel which make it unique in its kind.
The complexity is also enhanced by the fact that, unlike a work of art or an already bottled collector’s bottle of whiskey, the value of the casks does not only depend on demand, but also on the maturation of the cask. Therefore, a keg purchased this year will effectively become a new product over the years.
The Whiskey Cask Index demonstrates the projected values of a sample of twenty casks from a variety of distilleries around the world with varying age profiles. It should be noted that despite the global pandemic, which impacted the economy in early 2020, the Whiskey Cask Index remained optimistic, even growing.
In this data analysis, no distillery index has shown negative returns over the past 5 years, which is able to confirm that the market is relatively robust to negative impacts on the global economy.
Top 10 distilleries
The overall annual capital growth in this study across all distilleries and regions from June 2020 demonstrated a 13% increase in value. This was then broken down by distillery in order to understand the best performing distilleries in terms of capital growth.
The top 10 distilleries by capital growth are as follows:
- Highland Park,
- Caol ILA,
- Bowmore, and
It is extremely positive that no Scottish distillery has shown a negative index of capital growth. Projections ranged from an expected 5.13% annual capital growth for a small Scottish distillery, Ardmore, to popular larger-scale distilleries such as Laphroaig and Macallan, both of which have projected returns approaching 20% per year. year.
The best distillery in terms of expected annual growth is Laphroaig, where demand continually increases past supply. The next two distilleries in the ranking are both located in Islay, Bunnahabhain and Staoisha demonstrating the popularity of this region.
In terms of distillery territories, it should be noted that whiskey produced on the Scottish Isles dominates the top ten in the capital growth rankings, with only Macallan, Springbank and BenRiach representing mainland distilleries in this comparative list.
Whiskey investment trends 2021
As the whiskey market expands and expands into new and established markets, it has been predicted that demand will therefore align with this growth and therefore require supply to increase as well.
With increasing global demand for whiskey, the value of whiskey in casks will only increase, especially older whiskey, as well as the value of whiskey produced in 2020 and 2021 during the global pandemic due to closures of distilleries which resulted in reduced supply.
It is therefore not surprising that branded whiskeys distilled in 2020 or 2021 see their growth accelerate due to the lack of availability over this period and increased demand which makes it a very investable whiskey.
Recent data collected this year reflects the trends observed in the whiskey market over the past few years, with extremely reassuring results. This is particularly visible in the fact that the aforementioned whiskey index did not show any negative returns throughout the study period. The projected annual capital growth in the distilleries is expected to continue until 2021.
While growth continues at a comparable pace, the data suggests that investment in barrels from one of the top ten distilleries, which Elite Wine & Whiskey has access, could see their investment double in value over the next 5 years. In times of great uncertainty, these results offer great prospects for the days to come.
How to invest in whiskey
Whether or not you are an avid whiskey drinker, getting started in whiskey investing is extremely easy with the help of a financial expert who can educate investors in their investment. Once you have all the tools to make an informed choice, returns can be just as successful as drinking alcohol.