Does Whisky Appreciate In Value?
Before taking the plunge and purchasing whisky as an alternative investment, it is natural to want to be sure of the potential returns. If you are considering investing in the amber spirit, continue reading for a summary of the key facts and financial performance.
Increasing sales and value
During the financial year from April 2019 to 2020, the number of recorded bottles of collectable single malt scotch whisky sold at auction in the UK increased by a third to 143,895. Previously, the annual total was 107,890 for FY 2018-19. Similarly, total recorded sale values reached a record high of £57,707,707 – up by nearly 42 per cent from £40,772,550.
Interestingly, over the same period, the average price per bottle price rose by slightly more than 6 per cent to £401.04, compared to £377.91 in the previous twelve months. Healthy enough appreciation in itself, this was no mean feat in times of historically low interest rates and diminishing returns on conventional savings accounts.
Choosing collectable bottled whisky
Experience and know-how matter are crucial when one is looking to buy potentially collectable whisky. To achieve growth in value over the long term, it is good to seek less popular bottles and the highest quality possible. In some cases, these rare gems could well still be undervalued, especially if they have not yet reached the mass market.
Auction spirits specialists view the increase in the selling prices of certain whiskies as remarkable, quoting examples of a whisky worth around £100 in the mid-1990s that sold for tens of thousands of pounds at Sotheby’s. A spectacular result, the selling price reflected the liquor’s undeniable quality and, due to a now limited supply, its newfound rarity.
However, as an investment, bottles do have their possible downsides, mainly the dreaded ‘double D’: drink it or drop it. Also, savvy investors would do well to deal only with a reputable broker, to reduce the risk of buying counterfeit spirit. Buyers should research their planned purchase and avoid anything suspicious.
Appreciating values of cask whisky
Investing in casks can yield spectacular returns. Increasingly, today’s distilleries offer cask investment plans. Whisky fund examples range from small operators such as Ardnamurchan, Ardnahoe and Lagg to the large Diageo group with its Casks of Distinction programme.
As one would expect, whisky casks vary considerably in cost, depending on their quality, size, the type of wood and the contents’ age. Cask purchases include the oak barrel itself and new make spirit inside, although insurance premiums and storage are extra. Initial outlay ranges from around £1,000 at entry-level up to millions of pounds when the liquor is mature.
Finally, to help deal with tax regulations, legal titles, and other occasionally complicated paperwork, investors usually enlist an experienced broker or merchant’s help. Such experts may be willing to share their opinions and offer detailed advice or an assessment of possible appreciation, based on the individual cask, distillery and year.