When times are tough, investors typically rush to “safe harbour” investments, such as gold. Though now, there could be a new kid on the block.
Whisky, as a “safe harbour” may seem far fetched, and perhaps it is a reach, but the golden liquid’s been turning serious investor heads in recent years.
Whisky's value as an asset has increased dramatically.
As a result, whiskey investments have become increasingly popular in the past ten years. It's a hit with investors, and with collectors alike, offering enormous sums for the rarest and most requested bottles worldwide.
Its increasing popularity, especially in Eastern markets, can provide investors with huge profits.
Keep reading to find out more about the success of whisky as an investment and its possible future place in a “balanced” portfolio.
Backstory:
Whisky was invented in Scotland in the 1500s when monastery monks began to distil grains for medical purposes and make small amounts of whisky.
Its primary ingredients are grains such as barley, yeast, and water, distilled in copper pots and stored in wooden casks for a few years.
Water quality, distillation process, barrel quality, maturation period, and bottling process contribute to whiskey quality.
Most bottled whiskies on the market are a mixture of various casks and ages of whisky from a distillery. Even single malt whiskies are blended when they are bottled. This means that each case's distinct and unique characteristics are largely lost during the process.
As a result, single cask whiskies (bottled from a single cask), are substantially more expensive than blended whiskies.
Every step of the distilling, ageing, and bottling process is an art, creating a unique and often one off result which can last, or mature, for decades. This is largely the reason why whiskey is comparatively valuable.
Is whisky as a safe investment?
There is little doubt that Covid-19 has significantly impacted investment markets.
People have lost their jobs, businesses have failed, and some of our normal day-to-day activities such as how we work, get an education and socialise - have changed.
The various impacts of Covid-19, has left many feeling increasingly unsettled, vulnerable and desperate to find alternatives.
Although it seems tempting, we’re not suggesting you “turn to the bottle” to find solace. Well, not entirely.
The old standards are still there, gold for example has been “old faithful” for generations. In fact, since the beginning of 2022, the price of gold has increased by 34%, breaking above the $2,000 per ounce barrier.
Now though, in a digital world with app based delivery services and bonded warehouses, other forms of investing, like whisky, may offer a little variety, diversification, and well, frankly, excitement.
But is it “liquid gold”?
Even before Covid-19, single bottles of whisky were being auctioned for as much as £2 million. In fact then, worth far more than it’s weight in gold. Then again, you can’t drink gold, or drop it.
Nevertheless, the value of rare whisky has increased by 582% in the last ten years, simply dwarfing the already significant increase gold has enjoyed.
The pandemic appears to have had little effect on the continued popularity, and returns whisky can offer, so many now consider whisky to be a relatively stable investment.
Ultimately it comes down to scarcity. Once the final cork goes in the bottle, they simply aren’t making anymore of that particular vintage.
Will whisky hold it’s value?
There is a limited supply of rare whisky because it‘s generally matured for decades before it can be marketed. The supply of whisky can't be rapidly increased in order to satisfy demand (even after increasing supply, it won't affect the market for years) so its value can continue to rise.
Arguably the same scarcity and rarity that gold, or other precious metals offer, can be applied to whisky.
Whisky can be stored relatively easily - and is often more accessible than gold - so obtaining it is relatively simple and straightforward.
If whisky does begin to lose its value (which is unlikely) then you always have the option of drinking it yourself! Which isn't the worst idea if you have a 50-year-old Macallan lying around... Beats those “blue chip” shares we had in Enron anyway!
The top 10 whiskies to collect:
1. PORT ELLEN 1981- ISLAY SINGLE MALT
Only 210 bottles of this 33-year-old Port Ellen were released and were intended for travel retail so are rarely seen elsewhere.
There are only 174 bottles left in the world, retailing for an average of €6958
2. CAOL ILA 1981
This is a beautifully-matured Caol Ila, exclusive to The Whisky Exchange. It was bottled for the 60th anniversary of La Maison du Whisky.
It's one of just 201 bottles charged from a refill of yankee hogshead (that's a sort of barrel, if you're wondering) and retails for €879.
3. MORTLACH 1954- 65 YEAR OLD PRIVATE COLLECTION
Made in 1954 at Mortlach distillery, this Speyside single malt spent half a century maturing in a very single first-fill sherry puncheon, before being bottled in March 2019 for Gordon & MacPhail's Private Collection.
There are 286 bottles left, and it retails for an average of €9900.
4. GLENALLACHIE 43 YEAR OLD- SHERRY CASK DIRECTOR'S SPECIAL
A well-aged, very-sherried release from Elixir Distiller's Director's Special range – a 43-year-old single cask from Glenallachie. This was matured in an exceedingly sherry butt for its whole life. It's a superb bottling – big, rich and sherried.
There are 313 bottles left, and it retails for an average of €2629.
5. DALMORE 1966- CONSTELLATION COLLECTION
This is a fiery and rich Highland whisky, and retails for an average of €23,900.
6. PORT ELLEN 1979- 9 ROGUE CASKS
A limited-edition single malt from Port Ellen that tells the story of nine casks uncovered from the four centuries old stock of casks.
It retails for €6700 on average and there are only 1380 bottles of it in the world.
7. GLEN GRANT 1953 - 60 YEAR OLD GORDON & MACPHAIL
A long-aged Glen Grant single malt that has been nestled in sherry casks since 1953. Bottled by Gordon & MacPhail in 2013, it currently retails for an average of €3062.
8. PORT ASKAIG- 45 YEAR OLD
Distilled in 1968, this is an exceptionally complex whisky that any Islay fan will savour. It's a combination of 5 sherry butts, which were married together for the ultimate year.
It costs €2000 on average.
9. MACALLAN RUBY
A rich and fruity single malt from The Macallan 1824 series, it retails for an average of €1154.
10. ISLAY VIOLETS 33 YEARS OLD
An elegant whisky from independent bottler Elixir Distiller Islay Violets has been finished in ex-Cognac casks, which supplies it its floral character. Plus the bottle is completely gorgeous. It retails for approximately €472.
The Future of Whisky
Whiskey is a profitable investment right now, and it I suspect it will continue to be in the future.
Macallan recently completed a new £140 million distillery, doubling its previous capacity. Despite the extreme slowdown caused by the pandemic, which forced many Scottish distilleries to close or switch to producing hand sanitiser instead, this is a sign of a healthy sector.
The demand for whisky is growing worldwide. Eastern markets are on the rise and love the prestige a rare bottle of whisky can offer, at say a board meeting, or late night karaoke.
As a ”standard” bottle, of a “daily drinker” costs more now, across the board, than it did 5 years ago. Perhaps even buying a case of your favourite tipple from the supermarket, if you enjoy a drop, could be a sensible move given the above, along with the added pressure of rising inflation.
Either way we feel that if you’re looking for something to diversify with, you could do much worse than to consider whisky.
As always though, I’d strongly advise some deep due diligence before making any investmnet, in this case.. several tastings in front of a roaring fire could do the trick!
If you have any questions don't hesitate to send them to info@globalinvestorgroup.com, and we’ll be happy to share what we know.