Whisky is often called “liquid gold” and as an investment, whisky is starting to live up to the name. Last May, at Bonhams Fine and Rare auction in Hong Kong, two bottles of The Macallan 1926 sold in separate lots to different bidders for more than $1 million each, breaking world records for the spirit set just a month before. American whiskies have gotten in on the action, too—a barrel of Michters recently changed hands at a charity auction for $210,000, the highest amount ever paid for a single cask of bourbon. We barely need to mention how Japanese bottlings are faring. A 52-year-old Karuizawa recently went for nearly half a million dollars and the interest in Japan’s oldest and rarest stocks shows no sign of waning.
Over the past decade, rare whiskies have appreciated by 580%, outpacing the stock market and most commodities, according to Knight Frank’s 2020 Wealth Report. “Whisky does seem to be flying at the moment. Interest in whisky investment has grown significantly so it can be a great place to invest. I would recommend learning as much as you can about whisky, go to tastings if you can. Get to know the whisky market so you can understand which bottles sell well in the long term and which get temporarily inflated due to trends. If you love whisky it’s perfect because if the market goes down you can always enjoy the bottles yourself,” says Isabel Graham-Yooll, auction director at Whisky Auction.
An attractive investment
Investing in alcohol is by no means a new trend. People have been investing in wine for many hundreds of years, with some extremely rare bottles of wine fetching as much as $550,000. Whisky has been bought and sold for just as long, but the whisky market has become much more active in recent years.
Investments in whisky are largely driven by millennials who view whisky as an affordable asset with the possibility of massive returns. The fact that so few of the high-end whiskies are left in the market, making it more scarce and harder to collect from an investment perspective, makes investing in whisky even more enticing. It also has the added “cool” factor and all-important bragging rights.
As with any investment, investing in whisky it’s not without its perils or pitfalls. It’s not as simple as buying a few rare bottles at auction and storing them at home and waiting for the value to appreciate. You need to do your homework and rely on experts with knowledge of the whisky market to identify those that have the potential to appreciate. Here are a few pointers from seasoned whisky experts to keep in mind before you take a punt.
Look for aged, vintage bottles
The most obvious way to begin investing in whisky is to purchase some highly valuable collectable or limited-edition whiskies. You can simply store these bottles for several years as their value increases, then sell them for a profit. “A limited-edition official bottling of a well-made heavily sherried whisky is almost guaranteed to be in high demand from the moment it is released. It’s important to keep informed on new releases, limited editions, reviews, and prices. As a whisky investor, you also need to consider storage—but whiskies keep extremely well and need barely any maintenance,” explains Yooll.
As a general rule, there are two key factors to keep in mind for whisky investment: age and age statement (how long the whisky was matured in the cask). An older age statement is more valuable from an investor’s perspective. And the further back a whisky was distilled, the rarer it will likely be—making it more valuable. Last batches of distilleries that have closed and casks emptied for the last bottling is also a good option. You can also invest in a cask but with caution, adds Yooll. “Companies offering cask investment schemes are making unbelievable claims on how attractive the returns will be. Casks are trading for inflated prices at the moment and it’s easy to predict that many of the companies selling casks today will have disappeared when the time comes to cash in. Time will tell,” she says. Basic verifications—such as sampling the whisky, getting accurate measurements of bottles you’ll receive and tracking paper trails that include delivery orders and unique cask numbers are important details to consider before investing in a cask.
Look for reputed names
Those looking to invest in a bottle should ideally look for well-established names. Japanese whiskies such as Yamazaki or Karuizawa have traditionally done well if they have some sort of age on it. According to Paul P John, chairman and MD of Paul John Indian Single Malts, Scottish brands like Macallan, Glenachie, and Glenfarclas command especially high prices and enjoy a cult following among collectors around the globe. “Even bourbons like Pappy Van Winkle and W. L. Weller special releases, and several others from Buffalo Trace Distillery, offer great potential for investments. Old bottles from closed distilleries such as Port Ellen, Brora, Banff, and Dallas Dhu—also known as Silent Stills—are also a good bet,” he says.
Beware of the risks involved
Whisky is enjoying its moment in the sun, both as a libation of choice at the bar and as an investment vehicle. However, it’s not exempt from the risks that other investments bear. Counterfeit bottles do make their way onto the market. “Buyers should do their own research. A simple search on the Internet can help you compare the image of the bottle you are purchasing to a genuine bottle—although it’s worth noting that smaller brands do change presentation more often than you might think. Avoid a website that looks questionable. Look for the padlock icon in the address field to know that you are visiting a verified secure website. Keep an eye out for spelling and grammar mistakes and also be aware of promises such as ‘no risk’, ‘perfectly safe’, ‘totally legal’, ‘short term returns’ or ‘can’t be faked’. Most importantly make sure the website you are buying from has a physical address,” advises Yooll.
Lastly be patient
Patience is key in the field of whisky investments. It may take several years before your bottles have appreciated enough in value for the investment to have paid off. Whisky investment is also open to market fluctuations and more importantly, changing consumer preferences. In the worst case, if things do end up going south, you can always drink your investment.