Bill Lumsden, the head of distilling and whisky creation at Ardbeg, said: “I’ve really only tasted a whisky like this two or three times in my career. It has an emotional, comforting quality to it I find hard to put into words.” He said 1970s casks left in the distillery’s warehouses could be counted “on just a few hands”, adding that most whisky from that era was put into blends, meaning single malts are rare. Known as Cask No 3, the whisky was produced at the 207-year-old Ardbeg distillery, on the Scottish island of Islay. It sold for more than twice the amount the distillery and its entire stock was bought for in 1997. Thomas Moradpour, the president and chief executive of Ardbeg’s owner, Glenmorangie, a subsidiary of the LVMH luxury goods group, said the record-breaking cask was a source of pride for the local community. So how did Ardbeg arrive at such an astronomical price? The answer may lie in the fact that the GBP 16mn deal includes all the hidden costs: storage, insurance, bottling, labelling, distillery visits and taxes – costs that are usually added on top. In the UK, if you bottle a cask of whisky you can expect to pay around £8.50 in duty per bottle, plus VAT at 20 percent. Ardbeg has pledged to give GBP 1mn from the sale to charitable initiatives on Islay. 25 years ago it was a dying distillery – it was silent for most of the 1980s – and a quarter of a century later it’s one of the most sought-after whiskies in the world
Collectors enjoy investing in scotch whisky, because of the provenance, rarity and history.
Diageo also has a programme called ” Casks of Distinction”, wherein they unveil precious casks every year. The primary objective is to not just launch bottles & whiskies, but also invite people to enjoy an experience in Scotland, at one of the distilleries. Visitors can undertake distillery tours, enjoy nosing & tasting & above all engage with the brand & understand its core values. Guests can invest in whisky & stay invested for a long time, once they appreciate the liquid, the brand & the story. For the over-all Investment part, it is observed that people come from all across the world, not just UK or parts of China, as used to be earlier. This is quite reflective of the overall interest in investing in Whisky & managing a long term association with the whisky industry.
Whilst on Whisky Investment, Companies are also keen to showcase their legacy, share heirloom Collections and above all sell premium liquid. The investment is also going in Irish & Japanese whiskies, as well and will soon be seen in Australian & other categories. Some of the favourite whiskies continue to be from Islay, Scotland. Experts across the industry have seen whiskies popularity, as well as the global interest and rapidly increasing value of single malt Scotch whisky. In April a cask of 1988 Macallan sold to a private buyer through Whisky Hammer for just shy of GBP 1mn – a record at the time. Last month Sotheby’s hosted a sale that featured two casks from sought-after “silent” distilleries: a Brora 1982 and a Port Ellen 1979, which each went for GBP 875,000. The two casks in the Sotheby’s sale came from Casks of Distinction, Diageo’s direct-to-consumer programme, established in 2015 & boasts of some premium whiskies, including 28 single-malt distilleries and gives collectors direct access to a distinctive range of whiskies. Lot of casks are 25 years or older and can be bottled immediately. Prices for a Cask of Distinction start from six figures – a fee that includes distillery visits, samples, bottling and labelling, duty, VAT or import tax is extra The cask is chosen by the client from a selection of samples then stored at the Royal Lochnagar distillery near Balmoral, so they can pay their cask a visit whenever they wish to !
Trends online and physical auctions continue to prosper globally. UK still dominates in terms of number of people investing in Whisky. Volume and Value have returned to growth post pandemic. In fact, volumes grew by over 27 percent in comparison to 2020. On the Other hand, the Value Growth of over 33 percent returns well, after the Covid pandemic, with almost GBP 20M being more spent in 2021 v 2020. Average prices are back at pre pandemic levels even allowing for a huge increase in volume, suggesting demand remains strong. The Apex 1000 – broadest measure of the rare whisky secondary market shows double digit growth again.
So what kind of Brands or Styles are getting higher investment. In terms of Volume Share, The Macallan still dominates, growing its volume share significantly with Islay distilleries demonstrating continued strong appeal. On the Value Share – The Macallan accounts for GBP 4 in every GBP 10 spent on whisky in UK auctions – an incredible statistic. Islay distilleries remaining attractive to connoisseurs, collectors and investors.
Aged whiskies still command a high premium and as the Apex 1000 – which captures 1000 of the most widely traded bottles shows strong growth in 2021 v 2020, up over 13 percent.
Besides Scotland investment in whisky being high, Japanese whisky continues to appeal. There is some emerging demand for English and Tasmanian as well as Taiwanese. But these are all very small, except Japan, compared with Scotland. Age and Vintage is still critical and acts as a “hygiene” factor for many buyers. However, NAS releases from strong and powerful brands like The Macallan are also highly sought after! There is still see robust demand for Silent Stills – Port Ellen, Brora and Rosebank – the Holy Trinity, continue to perform well. As do many other, less well known, silent stills.
According to David Robertson, Founder Robertson Whisky Consultancy Ltd, Formerly Co-Founder Rare Whisky 101, “We are also seeing whisky clients add casks to their whisky bottle portfolios. This has been a more recent phenomena and our clients in the last 3 years have been requesting our assistance to procure maturing stocks. In fact, we have had demand from some clients asking if we can craft a bespoke or custom made spirit and select a range of first fill Spanish oak sherry casks for them to mature the spirit in.”
On The Collectors League Table – Volume led performance, The Macallan continues to lead and is followed by Iconic Islays of Ardbeg, Bowmore and Laphroaig. Springbank jumps up the table. On the Investors League Table – Value Performance Led, shows Silent Stills have 8 out of the top 10 places with only the open distilleries of Springbank and The Dalmore appearing. The Dalmore drops 4 places from leading the pack in 2020. Port Ellen has a stellar year up 10 places and is only bettered by Banff up 15, North Port up 19, Caol Ila up 34, Glendullan up 37 and Coleburn up 11.
For an Investor, the top 5 criteria for Investment in Whisky, as per David Robertson are:
Brand / Distillery: Big names or silent stills or new and upcoming, don’t bother with Glenanything – be specific and have a clear reason why you are going after that particular one.
Age / Vintage: Older is often better.
Rarity of release: Single cask, limited number, etc.
Think about the exit and diversify: who will buy what you have invested in. Have you got a good mix of Open and Silent Stills that cover a range of ages/vintages and price points?
Consider casks: custom made spirit from a trusted source matured in first class wood could do well in addition to seeking value in the 5-15 YO space from a well-known distillery (but this is becoming harder to source).
Whisky Investment is not just for old hands engaged on trading of whiskies, but also new comers who are looking at new areas of investment. This particular area combines passion & profession all together and rewards at times in multiples. Spiritual Luxury Living, India unveiled the same in India in 2017 and has been educating Indians in brands and possible investments and I am sure over time it will be an area of high Interest & pursuit.
Invest Responsibly !