Our answers to frequently asked questions on the Whisky industry.
Until recent years, whisky was difficult to purchase, so unlike many other opportunities like equities and bonds, whisky is not a ‘crowded trade’. Alongside this, choosing to purchase tangible assets gives you increased financial security – products cannot go bust in the way that organisations can - making them much more attractive.
Purchasing Scotch Whisky supports British industry and business. Scotch production makes up 25% of all British food and drink exports, and the sector employs around 40,000 people in the UK. Approximately 1.2 billion bottles of Scotch whisky sell every year, and with demand currently outstripping supply and growth forecast to continue, it presents a robust long-term opportunity.
A Whisky Cask Company purchase gives you a package that not only includes the Oak cask and the new-make liquid inside it but also bonded storage for 5 years to allow the whisky to mature and increase in value. Insurance is also included on the casks to ensure your peace of mind when purchasing. Purchasing a complete package with the WCC means that there are no storage deductions from any profit your purchase generates.
You have the choice between red and white wine casks, which provide unique flavours and characteristics to the whisky within.
New-make must be matured in oak casks for a regulated minimum of 3 years in order to become Scotch Whisky. The quality restrictions surrounding Scotch Whisky production are strict to ensure you are purchasing the highest quality, luxury product.
Aged for minimum 3 years but often much longer, production of Scotch Whisky requires that the distillation must occur in Scotland, that only Scottish water is added before maturation and before bottling, and that the casks are stored in Scotland throughout the maturation process. The only additive permitted is caramel. The Scotch Whisky Regulations of 2009 mean that the unique flavour produced in Scotch production is preserved carefully and unmatched worldwide.
Whisky is unlike many stored goods in that the product develops and increases in value as it ages in casks. Purchasing casks instead of bottles is more of a specialist approach, but one that is much more profitable in the long term. Unlike wine, whisky does not mature in the bottle, so once Scotch whisky is bottled there will be no change to it. The age statement on the bottle refers to the amount of time the liquid spent maturing in the cask, and the age of the whisky does not change no matter how long you keep it in the bottle. Generally, the longer that you leave the whisky in the cask, the higher quality it will be, so older whiskies command higher prices. Therefore, purchasing casks means that you are receiving a product that will improve and develop over time.
Purchasing a cask is a long-term activity, for a product that improves significantly over time. However, this is not the only advantage of purchasing cask whisky over bottles. Tax on whisky is much higher per LPA on whisky in the bottle than it is on the new spirit in the cask. This, in addition to the absence of duty charges on the whisky during the maturation process in a bonded warehouse, makes this a very tax efficient.
Purchasing into the Scotch Whisky market is attractive because unlike most tangible goods, whisky stored in bonded warehouses and is VAT free. As most private individuals don’t register for VAT, they would be unable to reclaim the 20% paid on tangible goods, but with casked whisky, as it's in storage, they do not lose that 20% of their capital.
WCC stores it's casks in bonded warehouses, in line with the regulations for producing Scotch Whisky. Bonded warehouses are secure buildings where the whisky can be stored to mature without payment of duty.
With the whisky market thriving at record levels, there are plenty of opportunities to make a profit on your purchase with WCC. Whisky is exported all around the world, and 25 bottles are exported to China every minute alone. The whisky blending industry is hugely lucrative, and there are plenty of opportunities to sell whisky after it has matured in the cask to specialist whisky companies for blending or as a single malt.
Depending on how long you keep the cask in storage, at the 5 year mark it will be around 320 bottles. The longer you keep it in storage the more liquid gets lost to the angels share.
The resale fee is 10% of the sales price.
Casks are available at certain times because they are delivered in batches from France.
We perceive that a 8–12% return is the going market rate through experience and historical values. We recommend that customers do their own due diligence and make sure they are comfortable comfortable before purchasing.
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