This article was last updated on February 16, 2022
Whisky is a favorite liquor for millions of people all over the world. Known for its distinct taste and amber color, whisky is a staple in the world of spirits. In Scotland, Scotch is a national product and export. Deeply ingrained in the history of the country, it has served as the catalyst for a large national industry. However, although everyone has heard of aged whisky as a luxury liqueur, this pricy drink has turned into somewhat of a commodity over the past several years. Investing in whisky has become a genuine financial avenue for many enthusiasts.
Nowadays, anyone can invest in a barrel of their favorite whisky brand and store it in the hopes that it will appreciate in value. However, numerous whisky “exchanges” have also popped up recently. These offer investment opportunities without the need to stockpile barrels in your house. Today, we are going to deep dive into this burgeoning new market and break down its ins and outs.
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Investing In The Whisky Market
As we mentioned, investing in different alcohols has become quite popular for both collectors and investors recently. Whisky, in particular, is by far the most sought after among the spirits. Its rich history, complex tastes, and tendency to become better with age make it ideal for long-term investments.
Limited bottle runs and special reserves can easily fetch more than $10,000 per bottle at auction. Meanwhile, whole casks are also sold at prices ranging from $3,000 to $30,000. Knowledgeable collectors will usually purchase these and add them to their extensive collections.
However, a new market has recently emerged that makes investing in whisky more accessible to the average trader. Several platforms have appeared online that offer the buying and selling of barrels to anyone interested. All you have to do is sign up and deposit funds.
Some of these also facilitate trading in fractions of a cask, as a whole one could be a bit pricy for casual investors. Such investment services often have specialized storage facilities, where they keep all of their client’s assets. Others will use the bonded warehouses of distillers. This delegates the responsibility to them and saves investors the need to worry about the logistics of managing casks.
In general, investing in whisky is a long-term venture, as the spirit appreciates with age. This is further helped by the fact that as time passes, the rarity of a particular cask or distillery increases. Some of the most highly-priced whiskies come from distilleries that have been closed down and no longer produce new barrels. Typically, investors will hold whisky for around five to seven years until it matures and then sell.
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Investing In Whisky Bottles Vs. Casks
When investing in whisky, buyers have two potential avenues – bottles or casks. However, these differ drastically both in terms of value and purpose. While both can fetch an incredibly high price, the former is understandably the cheaper option in most cases. However, that is not to say that a single limited bottle can’t cost upwards of £30,000.
Such special edition bottlings are usually limited in quantity to several dozen in existence. Brands will also sell them in luxury packaging, often including crystal bottles, boxes made from rare materials, and, in some cases, even valuable gemstones. This will inflate the price and make the range appear more prestigious. However, bottles remain the more approachable way to invest in whisky, as both the costs and logistics are more accessible to the majority of buyers.
On the other hand, you have casks. These are much more serious investments, often starting at around £20,000 apiece. The barrier to entry here is further raised by the additional costs associated with storage and transportation. Once you have purchased a cask of whisky, you will need to store it for the foreseeable future. In most cases, that would be about four years on average, as the idea is to wait for it to mature. This requires dedicated facilities and constant monitoring to ensure that it does not go bad. All of these additional costs accumulate over time to increase the investment price.
However, in recent years, whisky exchanges have appeared. These make investing in whisky casks possible while also providing storage services to offset the additional costs.
Whisky exchanges work very similarly to other market exchanges. On them, you can buy and sell whole, or even fractions of, casks, much like commodities. While investments in bottles are possible, they are very rare on such platforms and are mostly reserved for other marketplaces.
The service provider will store barrels for you in a dedicated facility, alongside the assets of all other customers. This eliminates the need for logistics on the part of the investor, making the market much more accessible.
Historically, the whisky trade has been tough to get into, as it would require not only substantial capital but also the ability to transport and store casks. As such, it has been chiefly confined to collectors and dedicated organizations. Now, with the emergence of whisky exchanges, investing in liquor has become possible for a wider public.
Whisky Invest Direct was the first whisky exchange to offer the service. Launched in 2015, the platform allows you to buy, sell, and trade casks of whisky around the clock. The company buys whisky at wholesale prices and then sells it to customers at a price raised by no more than 2%. They, in turn, can store it for an indefinite time in the distiller’s bonded warehouse. While there, the cask is fully ensured and is the property of the buyer. When you decide to cash out, you can choose to sell to other investors, blenders, distillers, or even the Whisky Invest Direct itself.
Rare Whisky 101 is another entity in the market that has set itself as a brokerage. It connects buyers and sellers, allowing them to conduct trades. However, as the foremost authority on whiskies, 101 offers a number of other services.
For one, they have created an index of the most traded and highly valued whiskies on the market. This allows investors to monitor which brands are the most popular and which ones have fallen off. Rare Whisky 101 also offers appraisal services to collectors and owners, giving them a way to certify the value of their liquors. All of these tools make investing in whisky far easier.
UKV is a UK-based company that allows customers to buy whisky, wine, or champagne. Mainly focused on the former, the platform trades in bonded whisky. The company behind UKV acquires bonded whisky through its own trading floor. This is then sold to customers and kept in the distiller’s bonded warehouse.
However, once the whisky has matured enough, customers of UKV will have several different options. They can either sell their casks or gift them to a friend or loved one. Alternatively, they can also choose to self bottle.
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Top Brands For Investing In Whisky In 2022
Like with all other asset markets, the whisky one is full of enough options to make your head spin. This can be discouraging to newcomers to the scene, especially those unfamiliar with producers and sorts. We strongly advise all traders to do extensive research into any new markets and assets they wish to invest in. To assist in this, we have prepared a list of some of the best whiskies to keep an eye out for.
Macallan is widely regarded as one of the best scotch brands in the world. It is also the go-to choice for many connoisseurs when starting their collections. When it comes to high-end Scotch whiskies, Macallan is the name that comes to everyone’s mind. This also makes it the ideal option for investors. The brand name is instantly recognizable and carries an air of class.
Macallan also releases limited bottles of special casks on a regular basis. This means that you will be able to snag one sooner or later, even if it comes at a higher price.
Japanese whiskies, along with the Scottish Scotch, are the two most highly sought-after types on the investment market. As such, they fetch the highest prices. If you would like to invest in a good Japanese whisky, then Hibiki should definitely be on your radar. Introduced in 1989, the brand has quickly become a staple among premium whiskies. Its distinct bottle shape and simplistic label make it instantly recognizable and have given it the status of an icon.
All of these factors will play in your favor, should you decide to invest in a bottle or two of these whiskies. Hibiki also often releases limited runs of special blends or casks. These quickly sell out and are very hard to get ahold of due to the brand’s popularity. Profits are almost always assured if you manage to snag one of these bottles.
Although American bourbon has not been among the most highly-valued spirits in a historical sense, this has been changing recently. The demand and prices for bourbon and rye, among other whiskies, have been on the rise.
So much so that the asset management firm Wave Financial recently announced that it would be purchasing 20,000 casks of Wilderness Trail’s bourbon to set up what they are calling the Kentucky Whiskey Digital Fund. These will be stored at the distillery’s facilities for six years until the whisky matures.
Smaller investors can take advantage of this and copy the large organization’s investment on a smaller scale. Success should be highly probable, as such firms conduct extensive research into potential assets prior to committing so many funds. As a result, they have already done most of the heavy lifting.
Clynelish Game of Thrones
A fairly cheap option, Clynelish is an ideal place to start for newcomers who are only testing the waters. Priced at about £50 per bottle, this Game of Thrones-themed whisky has caused quite a bit of a stir on the internet. While it is mass-produced and the supplies are ample, they are also finite. This means that in the long run, stores will begin to dwindle, and prices will increase.
The nice thing about this whisky is that a buyer base is almost assured because of the associated IP. Fans of the popular book series or hit TV show will undoubtedly be looking to add it to their collections. Interest will also be renewed as newer additions to the Game of Thrones world appear on TV and in books. This might be a great entry point for investing in whisky without requiring too much of a commitment.
Midleton Very Rare
Ireland is another country renowned for its whiskies. However, in the world of high-end spirits, the Irish ones have not been regarded as the most preferable ones. This has changed in recent years, and now, Irish whisky brands fetch a fair price on the international market.
An excellent example of such a brand is Midleton Very Rare. This luxury distillery offers a range of different bottlings. The most coveted among these is the Silent Distillery collection, which includes a 46-year-old whisky. This comes in a crystal decanter, housed in a wooden case made from 200-year-old reclaimed oak.
While the Silent Distillery whiskies are priced at £38,000 MSRP, Midleton Very Rare offers other, more affordable ranges as well. A new vintage is released each year, with the latest one being 2021. As a result, collectors are eagerly expecting the 2022 addition and will be quick to purchase it.
The Bottom Line On Investing In Whisky
Nowadays, you can invest in almost anything. Various goods from high-end liquors to luxury clothing and shoes have become akin to commodities. Investors will buy these with the sole purpose of holding onto them and selling them several years down the line.
As a result, investing in whisky has become a legitimate market in its own right. So much so that dedicated whisky exchanges have started appearing online. These offer investment opportunities and even allow the purchase of fractions of casks. This not only reduces the entry price but also further pushes whisky to the status of a commodity.