21 Mar Why investors are turning to whisky
The value of single malt and discontinued whiskies has shot up.
Here’s how to make the most of the growing whisky investment market.
A record number of bottles of rare whisky were sold at auction in the UK during the first half of 2015, according to broker and investment experts Rare Whisky 101.
The first six months of the year saw 20,638 bottles of single malt Scotch whisky sold in the UK on the open market. That’s an increase of 5,374 bottles (35%) on the same period last year. Compared to the first half of last year, the value of collectibles sold at auction grew 33.8% to £4,604 million.
Why whisky investing is booming
The whisky investing market is relatively young, compared to the likes of art and wine. And as it grows, auctions are attracting a bigger following.
Increasing competition coupled with low supply and high demand is pushing prices up, which make it more exciting for investors. Aged investment grade whisky is in particularly short supply as most distillers don’t have whiskies that go past 1980. Andy Simpson, co-founder of Whisky 101, said: “Demand for rare whisky and the supply of bottles at auction are both accelerating at an extraordinary rate, and this is driving up values.
“The dearth of truly collectable releases over recent years has only fuelled demand for older and discontinued past releases where quality and rarity are powerful motivations for purchase.”
And don’t forget that unlike wine, whisky doesn’t go off. It’ll still be delicious in a decade if you decide to drink it rather than keep or sell it.
The best performers
Single malts and discontinued brands are in particularly high demand.
Brota and The Dalmore are the top two ranked distilleries, with significant movement elsewhere in the firm’s Investors Distillery Index. The biggest risers in the top 30 are Bowmore, up 13 places from 18 to five, Ardbeg up 10 from 19 to nine and Glenfiddich, which went 16 places up to 23. Balvenie has suffered, dropping 10 places from three to 13.
The top 100 performing bottles of Investment Grade Scotch increased by 8.93% compared to the same period last year.
Collectors are increasingly turning towards Japanese distilleries as Japanese brands are performing well – even better than single malts. Kariuzawa has increased by 66.05% at the half-year point, outperforming any single malt Scotch brand.
How to invest in whisky
The same rules of investing in the stock market broadly apply to the “Investment Grade Single Malt Scotch” market (IGSMS), according to Simpson. Here are Simpson’s tips for those considering putting some money into whisky:
- Stick to well-known brands which already cater for collectors and investors
- Buy new bottles immediately upon release or buy older, previously released bottles
- Closed distilleries are a great source as they can’t produce any more whisky for the market
- Bottles which are measured in fluid ounces rather than centiliters are more sought after by collectors and investors
- Look out for rare bottles and special editions. Go for cask-strength bottles and single cask with a vintage
- Rarer distilleries have independent bottles which are more valuable so it’s a good idea to seek them out
Whisky is risky if you invest in the wrong bottle. It’s very important to look out for forgeries, especially if you buy online. Suspiciously low prices, poor label printing and no duty stamp are all signs of a dodgy product.
If you keep it at home, you’ll need to insure it. Speak to your home insurance provider to see if it’ll cover it against theft and accidental breakages, but be prepared to visit a specialist. Depending on the value of your collection it might also be worth installing a security system if you don’t have one already.
Finally, make sure they’re at their best by keeping your bottles at room temperature in an upright position, avoiding contact between the cork and the whisky itself.