Beware of Whisky Scams
Over the past decade, the value of rare and vintage whiskies has risen by over 500 percent. Tempted to invest? Watch out for scammers.
Whisky is one of the world’s favourite beverages. Export markets are booming. With thousands of Britons collecting and selling the spirit, experts fear scammers are utilising the buzz to promote low-quality investment opportunities.
The distinct nature of collectors’ markets makes them the perfect space for scammers to act. Often through adverts on search engines and social media, 96% of investment frauds begin online.
Although Google has introduced stricter rules requiring anyone advertising financial products to UK users to register with the FCA (Financial Conduct Authority), as a luxury product, whisky is not protected by such regulations.
Anti-scam campaigner Mark Taber warns against online adverts proclaiming investments in whisky casks. Many of these adverts epitomise classic investment scams, asking for information such as their visitor’s telephone numbers and offering guaranteed returns. Taber believes scammers may be using whisky as a way of staying ahead of the regulators.
A red flag, according to Taber ‘is that these adverts are deliberately targeting anyone searching for investment advice, rather than people looking to buy whisky’.
‘There is also a danger that companies will sell on the details of potential victims, who will then be targeted by more typical investment scams.’
Another sign of investment scams is the promise of high returns with no mention of risks. Money Mail looked into the websites of four companies advertising whisky investments. Each site offered the opportunity to buy casks of ‘new make spirit’, a clear alcoholic liquid that eventually matures into whisky. The companies claimed their casks would sell for a strong profit after their spirit matured.
Whilst the profits from casked whisky are devoid of capital gains, whisky experts are cautious of such investment opportunities as returns are not guaranteed.
Ardnahoe, the newest distillery to open on Islay is one of many distilleries selling casks of whisky to private investors. Their prices range from £2,000 to £12,000. Co-owner Andrew Laing says: ‘We would never tell anyone they should expect a certain price or return…It’s very much about the experience of owning your own whisky, rather than a typical investment.’
Mark Littler, auctioneer turned expert whisky valuer is wary that some of the companies advertising online are also deceiving investors. He says: ‘Casks can be a good investment. But if you are expecting 10 per cent returns a year, you will likely be disappointed.’ ‘The value of whisky doesn’t always go up linearly, and you won’t make any money until you sell your cask completely.’
Littler’s advice on buying whisky directly is to find out exactly what you’re getting; seek independent valuation where possible and keep in mind additional costs, such as bottling the whisky when it reaches maturity.