Investing in whisky

on Oct 27 in Editorial, Single Malt Whisky by dan

Whisky has existed for hundreds of years (thank god), with its first recorded mention dated to June 1, 1495. By comparison, whisky’s lifetime as an investable asset class has been microscopic – the concept was pretty alien until 1989, when Bonham’s held its first ever dedicated whisky auction.

After a slow rise throughout the 1990s and early 2000s, investments in whisky became more prominent due to the continued rise in value of the rarest whiskies in the years following the 2008 financial crash. It is now no longer uncommon to see major news publications advocating investment in whisky as the next hot thing; or, as one CNN article put it, how one’s love of whisky could translate into ‘making millions’.

There are three main ways in which you can invest in whisky. The first, which generally has received most coverage, is to purchase rare bottles for later sale at auction. As an ‘emotional asset’, as one author has termed rare whisky, investing in such bottles seeks to profit from the limited supply of, and high demand for, very limited whiskies worldwide.

A second option would be to invest in distillers directly. Such an investment would take the form of buying stock in well-established corporations like Diageo or Pernod Ricard, or buying your own cask of whisky direct from the distiller, which is super cool but potentially pricey. A cask from Annandale distillery can range cost from £2,100 to £1,000,000 for their first-ever cask. Finally, a new option (highlighted to me via email) is to own maturing whisky from a variety of distillers with WhiskyInvestDirect. Unlike traditional cask investment schemes, this allows potential investors to purchase individual Litres of Pure Alcohol (LPA) and store it in bonded warehouses at the wholesale rate.

This type of investment frees up capital for distillers today, while allowing access to the historic returns of 7.1% per annum that WhiskyInvestDirect states maturing whisky has shown in the last decade. In doing so, investors get to assist the industry today while participating in the profits of tomorrow – and by helping produce bottles that will be drunk, not stored away in a ‘portfolio’!

It seems like a neat idea to me, and if you have the money to spare, then its worth a look I reckon.

Dan Cave

Here is a link to the Whisky Invest Direct website:

Disclosure: I’ve not used there services, so I can’t endorse them, but having spoken to the chaps a few times over email, they seem like pretty nice folk.

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