The top tips for investing in whisky - including buying a cask
2023 saw a record breaking sale of a single bottle of whisky (the Macallan 1926 sold for £2,187,500 / $2,714,250), and with many old and rare bottles released, it looked like a bumper year for luxury investments. But the latest results of the Knight Frank Luxury Investment Index (KFLII), which tracks the performance of 10 popular investments of passion, reveal a less positive picture as some of the main categories they track showed minimal gains. Whisky is one of these, and was the worst annual performer, but it’s not all doom and gloom. Andy Simpson of Knight Frank explained: “To some degree, 2023 continued to be a challenging year with the Knight Frank Luxury Whisky Index dipping almost 9 per cent. But while the worst performing 50 bottles lost 26 per cent of their combined value, the remaining 50 bottles gained 5 per cent, with the 20 best performers increasing by a respectable 20 per cent. This is further proof that knowledge is ever more critical when it comes to selecting the right bottles and distilleries. In my opinion some bottles that lost significant value in 2023 will return through the next two years as they are simply so scarce and, right now at least, so undervalued.”
It’s easy to get caught up in the excitement of releases of old and rare whisky, even from a non-buyer’s perspective, but how did whisky go from a drink to an investment? Whisky expert, author and co-founder of the Maclean Foundation, Charles Maclean explained the history of this, saying: “The idea of whisky as an investment really took off after the 2008 financial crash. Stock markets went flat, and the wealthy sought alternative assets -- fine wine, classic cars, art, and of course, whisky. By 2017, the Knight Frank Wealth Report claimed that whisky was outperforming all other alternative investments, based on record-breaking auction results, particularly for Macallan. However, inflated prices and deep-pocketed investors have since distorted the market, with returns beginning to dip over the past year.”
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Whisky cask investment advice
Over the last few years a number of companies have sprung up offering whisky cask investment services. While the buying and selling of casks isn’t new in the industry, the rise in numbers of companies offering this service, coupled with record-breaking auction sales for bottles, has piqued investors' interest in whisky casks as a commodity. So what do the experts advise?
Alan Park, legal director at the SWA said: “Scotch Whisky continues to be an internationally popular spirit, with consumers all over the world appreciating its diverse flavour profiles and longstanding heritage. Personal investment in casks has become popular in recent years, with a number of companies offering advice and opportunities for investing in a maturing cask of whisky. However, while personal cask investment is exciting, as with any investment, care should be taken to understand the market and the obligations and costs of cask ownership.”
Mr Maclean is more straightforward, saying: “My top tip for whisky investment? Don’t! It’s become a treacherous game, particularly in the realm of cask investment. There’s been a surge in fraudulent brokers selling casks that are overpriced, non-existent, or even sold multiple times. Best to buy casks direct from distilleries, where you can. If you’re buying from a broker, consider the terms they are offering carefully - and the small print - and make comparisons between brokers.”
Blair Bowman, a whisky broker and advisor to the whisky industry, continues his campaign to educate people on investing in whisky and had this advice: “The main key thing to stress in terms of advice is really do your due diligence on anyone you’re undertaking any kind of unregulated investment with - look at Companies House and all of that kind of thing. If you do decide that you really do want to buy a cask and go ahead with it then make sure that all the paperwork is in your favour and that you have full rights to the casks and that’s normally, traditionally done with a delivery order. That is absolutely critical. You need to make sure that you own that cask. If you’re told you’ll be given a certificate of ownership, frankly that’s absolutely worthless. It doesn’t mean anything. If the cask in the warehouse isn’t in your name and is in the name of the company that you bought it from, if something was to happen to that company and they were to go bust or vanish or collapse then in the eyes of HMRC, you’re not the owner of that cask. The cask was never in your name on the record, it was always recorded as the company’s cask so having it transferred into your name is the most vitally important thing.”
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Hide AdCameron McCann, co-founder of Stirling Distillery echoed these points, saying that once people find out what’s involved in cask investment, they’re often put off. He said: “When I speak with people about it, I always say it’s like anything, shares, gold or art - what goes up can come down. We get a lot of people wanting to invest in buying a cask of whisky, but I always start by asking why? Many see online companies offering massive returns and they say that’s why. Then you start to explain the ins and outs of cask buying and many back out as it’s just not for them as they don’t have an exit strategy. They are also unaware that to bottle it and take it out of bond it costs similar to the initial purchase. Then what are they going to do with 300 plus bottles of the same whisky? I’ve always advocated for the individual that buying bottles of whisky is safer and more fun. There are too many businesses selling casks in a ‘get rich quick’ kind of way today. People need to do their due diligence if they go down that route, and it’s always safer to buy directly from the distillery itself.”
Tips on buying bottles of whisky as investment
While most people don’t have the cash to buy a cask from a distillery, many of us can afford to buy bottles, so what should you look out for if buying bottled whisky as an investment? There are the obvious main luxury brands such as the Macallan and The Dalmore, and then there’s the cult-following distilleries, such as Springbank and Ardbeg, whose releases - especially limited editions - are often well worth buying.
Jonathan Gibson, director at House of Hazelwood said that the prospect of buying rare whisky can seem very intimidating if you don’t do your homework but one of the easiest ways to invest in whisky is to buy bottles directly and store them until you decide to sell. He had three points to consider: “Take every opportunity to taste something new and learn about the different regions, blends and styles that you prefer. While you may make money out of the bottle in time, if that doesn’t happen at least you can enjoy drinking it. Take care where you buy your whisky from. There are a lot of fakes about, and even bona fide retailers and auction houses can be caught out. Arm yourself with as much information as you can, try to buy from trusted sources with a track record in the industry – and, if something looks too good to be true, then it probably is. Finally, never buy into the myth that single malts are inherently better than blends. The finest examples of the latter transcend their component parts to make something greater, thanks to the skill of the blender honed over many decades. Combine that with aged and rare whiskies and you are on to something truly special. This is where House of Hazelwood Collection comes into its own. The collection has whiskies that range in age from 33-Years-Old up to 58-Years-Old and includes blends, blended malts, grains and blended grains that are extremely rare and or unique in some way.”
It’s key to remember when considering whisky as an investment - either a cask or bottle - is that each and every drop was made to be shared with friends and family and, ultimately, enjoyed. A sentiment which is echoed by Mr Maclean, who has put his expert knowledge and contacts to charitable use: “Ultimately, whisky is meant to be enjoyed, not hoarded in garages or treated like gold bars. That’s part of the reason why my family and I launched The Maclean Foundation. By turning donated casks into clean water projects, we’re reminding people of whisky’s true spirit: celebration, community, and connection. Our first release, a seven-year-old Ardnamurchan single malt, sold out in just three weeks, and just a few bottles remain of our eight-year-old whisky donated by Glen Scotia, with all proceeds funding boreholes in Madagascar. This legacy initiative is my way of giving back to an industry that has given me so much.”