|26-05-2017||By Emily Stockden|
Investing in rare whiskies is a tricky business and could land an imprudent investor in need of a stiff drink if wrong decisions are made. So how does one go about investing in whisky?
1. Look out for limited edition bottles that are likely to rise in price once sold out
Every year Diageo brings out a range of much-anticipated limited release whiskies and 2016’s range included a Brora 37 year old 1977 edition as well as a Port Ellen 38 Year Old 1978 16th edition (the second most expensive and the most expensive of the range, respectively). These are particularly special as both Port Ellen and Brora are mothballed distilleries. In other words they aren’t currently operational and so their rarity is guaranteed not only by the fact that more cannot be produced but also because Diageo limits the numbers of these releases.
A bottle of Port Ellen 14th edition cask strength limited release whisky
Note: the market is unregulated so – as with any investment – proceed with caution and do your research before investing. If you’re not sure, consult professionals like Rare Whisky 101’s consultants.
2. As with most rare goods it’s all about reputation, scarcity and exclusivity
Not only is The Macallan M in its Lalique Crystal decanter beautifully crafted, but it’s also one of only four ever produced making it exclusive and scarce. In addition, The Macallan has an excellent reputation and repeatedly features on Rare Whisky 101’s top 100 index. It’s so popular as an investment whisky that it has its very own index on Rare Whisky 101!
The Macallan M
3. Don’t only think Scotch Whisky
Ever since Jim Murray named Yamazaki‘s 2013 Single Malt Sherry Cask the World’s Best Whisky in 2015, the demand for Japanese whisky has sky-rocketed. Given that whisky investments are based on supply and demand, Rare Whisky 101 – a whisky consultancy holding a large index and generally the most trusted source regarding whisky investments – cites Japanese whisky as experiencing double digit growth over the past years, with bottle values increasing from 100 to over 300. At this stage, any bottle of Japanese whisky that contains an age statement is probably worth investing in, given that Nikka and Suntory – 2 of Japan’s biggest distilleries – have pulled back their age statement whiskies in favour of releasing No Age Statement (NAS) whiskies to keep up with demand.
Some specifics that you can look out for include Hanyu with its playful labels.
Quirky labels from the Hanyu Distillery
Ichuro’s Card Series is also well worth buying as it’s notoriously difficult to find. The whole collection sold for $500 000 at a Bonhams auction in Hong Kong!
Ichiro's Card Series
Perhaps the most important Japanese whisky of all when it comes to investments is Karuizawa which closed its doors in 2011 and which grew in value by 75% in just nine months in 2015 (after which prices dropped 6% and continue to drop, although only slightly). It only produced 150 000 litres of whisky per year made from barley imported from Scotland and sherry casks from Spain. The water used flowed through lava, giving it an exceptionally peculiar taste. Unfortunately, their insistence on only the best and on traditional methods made the distillery commercially unviable… It also made the whisky superior and well worthwhile investing in should you be able to source a bottle of it!
Karuizawa Vintage Single Malt Whisky
4. Consider auctions
And remember that it’s not only Scotch whisky that is appreciating in value. Japanese whisky is worth considering given that in August 2015, a bottle of Karuizawa 1960 was sold for over $100 000 at a Bonhams auction in Hong Kong – and that’s not even the most expensive bottling available!
An example of whiskies sold at auction
A word of caution: auction houses will add up to 25% commission to sell the whisky, so online auctions – which normally add up to 10% – are perhaps a better option. Also don’t forget that the cost of transporting the whisky and the auction house commissions are not part of the return.
5. Buy a fund
You could outsource the selection process by investing in a fund where the manager will choose companies and bottles on your behalf although this isn’t a service that is widely offered. The Hong Kong-based Platinum Whisky Investment fund would be able to assist, although the minimum by in is a cool $250 000. If that’s a little too rich for you, you could also consider buying shares direct in companies such as Diageo or Pernod-Ricard.
Whisky is considered a worthwhile alternative investment by many
So rather than buying it by the bottle or cask, you can buy whisky as it matures. WhiskyInvestDirect.com deals in litres of pure alcohol units and charges 1.75% commission on trades.
All you need to do is sign up, choose a distiller and leave your investment to mature in the cask for a minimum of three years, of course. The whisky is then bought back by one of the big whisky brands to be sold on the open market and you get any returns from the price paid and any profits made.
The minimum storage fee is £3 a month and barrels from nine distilleries are offered, including: Ardmore, Auchroisk, Benrinnes, Blair Athol, Cameronbridge, Dailuaine, Glen Spey, Inchgower and North British.