Joining this year’s rush of “goldbugs” might seem tempting if growth predictions are to be believed, but investors must look at their portfolio in the round first.
With a 20%+ net return market average for each of the past six years, investing in rare whisky, which is a relatively new asset class, has become an attractive option.
Rare whisky bottles are a physical asset, insured and within your control, and are now enjoying increased popularity across the world.
The very first distinction to make is between blended whisky and single malt whisky: 95% of all investment grade whisky is single malt, which means it was produced at only one distillery. In contrast, blended whiskies, such as Johnny Walker and Chivas, are made from mixing together many different whiskies and therefore allow for the adjustment of production levels based on demand.
What is unique about aged single malt whisky is that to make an 18-year old whisky takes 18 years in the barrel at the distillery – and there is no way to produce it any faster. Since 2007, most large distilleries in Scotland have begun increasing production, but the reality is their first barrels of 18-year old single malt whisky won’t be ready until 2025; the 25 and 30-year old whisky won’t be ready until the 2030s.
While supply is currently limited, demand for single malt whisky has been growing steadily over the past five years in the UK, US and Asia:
In short, whisky investment fundamentals are based on the simple principles of supply and demand. In the 1980s and 1990s, distilleries did not put enough single malt whisky into barrels for long-term ageing to meet current global demand. This imbalance of supply and demand has led to the steady increase in the prices of older and rare bottles.
Source: Rare Whisky 101
The risks involved in rare whisky investing:
It’s important to realise that not all rare whisky goes up in value. You also have to be careful about authenticity, so it is best to work with a professional who knows the market. Generally I advise my clients to look for:
A registered whisky merchant can help you to resell your whisky through three principal exit strategies:
Platinum Wines provides full buying support, assistance with transport and storage, exit strategies, monthly market and quarterly portfolio evaluation services specific to our private clients’ holdings of fine wines and rare whiskies. Some key features of our service and fees for whisky investors are:
There is unfortunately no one place to go to get a spot price on whisky assets, although you can observe the last traded prices at auctions and compare listings at online whisky retailers. To observe indices for a quick general market view, you can visit RareWhisky101.com, which tracks the performance of whisky bottles at UK auctions.
More established whisky merchants should be willing to provide portfolio evaluations and reports both periodically and upon request, free of charge, as an after-sales service.
findaWEALTHMANAGER.com is an independent service designed to help clients navigate the opaque world of finance and wealth planning. Our team of experts have a combined 70 years of knowledge can help you find the right professionals to discuss alternative investments and other specific requirements. Book a call with our team for an independent, no obligation chat HERE or try our smart online tool to see which firms match your profile HERE.