Investors have been trading within the alcohol industry for centuries, with much of the action being seen around fine wines. However, investors have recently begun to look` toward whisky. In the first half of 2018, the value of rare Scotch whisky managed to exceed £16 million for the first time, marking a year-on-year increase of 46% during the same period in 2017. The market has grown since 2013, with a 732% increase, clearly highlighting a rising interest in Scotch whisky.
Here, we’ll look at whether or not the new interest in whisky is enough to take on the all-conquering fine wine industry.
Whisky investment is increasing in popularity
In 2017, the market value of a rare Scotch rose by more than 70%, smashing the £25 million mark and making whisky a better investment than gold. A huge 83,713 bottles of rare whisky were sold at auction in Britain that year, with an average bottle price of £299. The most expensive bottle sold that year was a 62-year-old Dalmore The Kildermorie, which was one of an edition of just twelve, and fetched £95,000 at Christie’s in London.
The interest in whisky has only increased since then, and bottles aren’t necessarily just being bought up by enthusiasts wanting to actually taste the drink. Instead, rare bottles—such as The Macallan Valerio Adami 1926, which was bottled in 1986—are bought solely for investment purposes, to be sold on for more money at a later date. The 60-year-old whisky broke the world record in 2018, where it sold for £848,000 at auction in Edinburgh for just one bottle.
Whiskies worth investing in are usually made in limited editions, making them much harder to come by on a day-to-day basis, or are brewed by a smaller, independent distiller. These blends can fetch a high price if the distillery becomes popular over time, or conversely, if it goes out of business. Independent distillers tend to only produce a limited number of bottles due to the small scale of their operations, making these bottles rare and therefore more appealing to investors.
If you think you’ve come across an unusual bottle of whisky in your possession, you can get it valued by an expert to see if it’s worth selling on to an investor, or whether you should just drink it. This idea of having your alcohol analysed to check the worth originated with fine wine, but now some companies are offering their expertise to cover whisky as well. The London Wine Cellar, for example, noticed the rising interest in Scotch and adapted their services to offer a free whisky or spirits valuation.
Investing in fine wine can still be worthwhile
Despite the increased interest in investing in spirits, fine wines are still a worthwhile investment, provided you know how to navigate the industry. The worth of any investment is subject to fluctuations within the industry, such as the popularity of the product. However, throughout 2018, the fine wine market traded within a 2% range, outperforming other investment-grade assets, like gold, art, and real-estate, according to a report by Liv-Ex, the fine wine industry’s global marketplace. Any investments into the industry will generally be safeguarded thanks to the continued interest, as long as you’re not pulled into any fine wine scams.
Whether or not a fine wine is worth investing in generally depends on the region and vintage it was produced in. A more prestigious vineyard in a well-known region, such as Bordeaux, will automatically be worth more than its counterparts. Similarly, a particularly good year, or vintage, will boost the value of a bottle, so it’s important to research any wine you’re investing in, and only buy from licenced seller to avoid being caught out by scammers.
There are different ways to invest in whisky
If you are looking at putting your money where your decanter is, it’s important to know the various ways you can invest your cash. For whisky, you can invest in the physical bottles, which can be housed almost indefinitely, providing factors like light, temperature, and humidity are controlled. However, it’s important to note that, unlike wine, whisky does not mature in the bottle—a 25-year-old Macallan will always be a 25-year-old Macallan, regardless of how long you leave it unopened. If you manage to get hold of a particularly popular, limited blend and keep it long enough, however, you may be able to have one of the remaining few bottles once the rest of them have been drunk. In theory, this should increase the value of your whisky, as the blend will become rarer. If the interest in that particular bottle is there, the bottle will be worth more.
If you have the budget, you can also invest in full casks of whisky. For this, you need to research into which distillery you want to work with, and ensure that it produces a single malt or grain that you would want to drink, making certain that it is good enough Scotch to sell. In some cases, you may even be able to store the cask yourself, letting you decide when it has matured enough to be bottled. This also means you have more control over the price of the finished bottles—a more mature whisky will allow you to claim a higher price, boosting your profit.
Ageing your whisky in a cask develops the flavours, giving you a richer—and more expensive—finished product. It’s also important to note that several factors such as branding, region, and even the type of wood used in constructing the casks, can have a significant impact on the whisky price, which you should take into consideration when making your initial investment. However, if there isn’t a demand for your cask, then you’ll be left with a (very) large volume of whisky, so it’s important to have an interest in drinking whatever you choose to invest in.
The current high interest in whisky ensures that there is a demand for any whisky investment you make. Public interest has steadily grown over the past few years and looks set to increase further. However, this could change at any point. If the public ever loses interest in drinking whisky, then you may lose out on your investment, or not make a large enough profit. However, investors have always had success with wines regardless of public interest. Even though whisky is currently a trendy investment to make, only time will tell if it’s enough to rival the fine wine industry.
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