18th September 2019
Next week’s “The Whisky Show” in London is set to be attended by a record number of investors, not just for the wonderful whiskies, but to learn about making money from buying and selling wee drams!
Surge of whisky price rises
Bottles of rare and expensive whiskies saw a magnificent 5% rise within the last year, but is nothing compared to this last decade, which saw a 500% increase in value! These are all according to the Rare Whisky Icon 100 Index which measures the value of the 100 most sought-after whiskies.
Just last year, auctioneer ‘Bonhams’ broke the world record on more than a couple of occasions for the price of whisky sold at an auction. In one day, a 60-year-old bottle of Macallan sold for a mouth-watering £752,000. An hour later another bottle of the same brand, went under the hammer for a staggering £814,000.
Despite these very high numbers, investors should not just assume that high prices equal high profits. Trading costs can largely contribute to the final selling price, with some auctioneers demanding up to 30% of the sale price. In addition, the investment whisky market is filled with scammers advertising fake whisky as rare malts. Therefore, it is essential to only purchase barrels or bottles from reputable stores.
Investment whiskies tend to start from roughly £150 for a standard sized bottle. The market has a high level of focus on single malt whisky picked from the most sought-after distilleries in Scotland, such as Glenkinchie. Bottled Scotch gathers more investment than when still barrelled. However, focusing on just bottles can have lower returns, as you purchase in much smaller quantities.
Our own Alexander Johnson, founder of The Whisky Cask Company, says a 225-litre cask of whisky can be purchased for £5,000 - enough for roughly 300 bottles of the spirit. However, storage charges and insurance can cost up-to £100 a year, and storage alone costs roughly 2% of the whiskey. This is known as the infamous “angel’s share” which evaporate every single year.
Alexander says: ‘A master taster will make regular checks on the cask and if required make changes to the process – for example, putting whisky into a different cask or keeping it within the barrel for longer allows for further development.’ Alexander also says that through our company, investors can enjoy a 10% annual return on their investment, much higher than traditional investments. This also comes with a couple of tax incentives, as investors will avoid any duties or VAT if it is then sold back to the producer, which further increases the profitability.
Once the whisky has been bottled, it can be stored for a long time, making it ideal for investors. It should, however, be kept upright and away from direct sunlight, to ensure it holds its best qualities. Within three or so years, the spirit will officially be known as whisky, but usually stays in the barrel at least a decade before bottling; which gives whisky its intense colouring and marvellous flavour.