Investing in whiskey has become increasingly popular in recent years, as the value of rare and aged whiskey has soared. Whiskey investment returns can be significant. However, the market for whiskey is volatile, and prices can fluctuate. Additionally, there is always the risk of loss if the whiskey is damaged or lost. If you are interested in investing in whiskey, this guide will help you in starting your journey.
Why Invest in Whiskey?
To be clear. Whiskey is a complex investment asset. It is particularly complex because of the vast variety of the product that is available in the market. Today, you can get a bottle of whiskey for less than $5 in most places around the world. Therefore, it takes a long path to understand the best way of investing in whiskey.
There are two primary reasons why you should invest in whiskey. First, if you have taken the long path of learning more about whiskey, it is relatively easy for you to invest in it. Like in stocks, all you have to do is to research and find the best type of whiskey to invest in. Second, after you have invested in whiskey, you don’t need to do anything. All you have to do is wait for the price to appreciate.
Whiskey Investment Returns
The returns on whiskey investments can vary depending on a number of factors, such as the type of whiskey, the age of the whiskey, the distillery, and the market conditions. Additionally, the time it takes to break even can vary significantly based on the aforementioned factors. Some casks might appreciate more quickly, while others might take longer. The investment timeline can also be affected by storage costs, fees, taxes, and the specific market conditions at the time of sale.
Investing in whiskey can offer lucrative opportunities. In October 2018, a bottle of a 60-year-old Macallan whiskey was sold for more than $1.1 million. 24 hours later, Christies sold another bottle for more than $1.2 million. Earlier in the year, a bottle from the same distillery sold for more than $1.1 million in Hong Kong.
However, it also carries certain risks that investors should be aware of. Firstly, whiskey is a highly delicate asset, necessitating careful handling. If a bottle is broken or accidentally opened, the investment is lost, as the value lies in the sealed and intact nature of the bottle. This fragility underscores the need for proper storage and transportation protocols to minimize the risk of damage.
Secondly, whiskey is considered an illiquid asset. Unlike stocks or other financial instruments that can be easily bought or sold, exiting a whiskey investment can be challenging. Finding a buyer willing to pay the desired price for a specific bottle or collection can take time and effort. This lack of liquidity means that investors may face difficulty in converting their investment into cash when required.
Another risk associated with whiskey investing is the long-term nature of the investment itself. Unlike more traditional investments that can yield returns in a shorter timeframe, whiskey often requires a significant amount of time to mature and appreciate in value. It can take several decades for the investment to reach its full potential, and investors must be prepared for a long-term commitment.
Furthermore, factors such as changes in consumer preferences, market demand, and economic conditions can impact the value of whiskey investments. Shifts in taste preferences or a decline in demand for certain types or brands of whiskey could lead to a decrease in value. Economic downturns or changes in the global whiskey market can also affect the investment’s profitability.
Types of Whiskeys
Each investment asset class has its lingo. This is true for commodities like crude oil, currencies like the dollar, and stocks like Apple and Google. This is also true for whiskey. Some of the terms you need to understand are:
- Malt whiskey: This is whiskey that is produced using malted barley, yeast, and water.
- Single malt: This is whiskey that comes from a single distillery.
- Single cask malts: This is whiskey that comes from just one cask.
- Blended malt: This is whiskey that comes from more than one distillery.
- Blended scotch whiskey: This is whiskey that mixes malt whiskies and those made from whole grains apart from barley.
- Bourbon: This whiskey that is made in the United States from a mash of at least 51% corn, and it must be aged in new, charred oak barrels.
- Angles share: This is the alcohol that evaporates while the whiskey is maturing. If the alcohol by volume drops below 40%, it cannot be sold as whiskey.
How to Invest in Whiskey
Investing in whiskey involves a series of steps that can help you make informed decisions. If you’re interested in buying whiskey as an investment, there are essential steps you should follow. These steps will guide you on the path to becoming a knowledgeable and strategic whiskey investor.
Practice is key to success when it comes to whiskey investing. Visit different bars and taste a wide variety of whiskeys. It is recommended to choose bars with a diverse collection of whiskeys for a better tasting experience.
Do Your Homework
Educate yourself about whiskey by immersing in relevant literature. There are numerous whiskey-related books available on platforms like Amazon. Focus on historical books that delve into the whiskey traditions of Scotland, the United States, Japan, and Ireland.
Set a Budget
Determine how much you’re willing to invest. Whiskey investment can range from affordable bottles to high-end collectibles, so having a budget in mind will help guide your choices.
Once you have gained some knowledge about whiskey, it’s time to go shopping. Purchase several limited editions, but exercise caution to avoid making unwise choices. Seek guidance from a trusted whiskey expert who can provide valuable advice. Additionally, attending popular whiskey-related events and touring distilleries can enhance your understanding and appreciation of different whiskeys.
Invest in Reputable Brands
Stick to the iconic distilleries like Macallan, Ardbeg, Dalmore, Glenfiddich, Balvenie and Lagavulin, to name a few. These brands have a proven track record of producing high-quality whiskies that appreciate in value over time.
Focus on Rarity
Invest in rare and aged whiskies because these whiskies are more likely to appreciate in value over time. However, they can also be more expensive.
Insure Your whiskey
As mentioned above, whiskey is a high-risk investment because your bottle can break any time. Buglers can also steal your collection. To stay on the safe side, it is recommended that you insure the whiskey. Today, many companies like AIG are insuring exotic investments like whiskey, watches, and cars. While buying a policy might seem as an expensive bet, it is worth it eventually. The rule of the thumb is to check or revalue your collection of whiskey every three to five years.
Investing in whiskey is a long-term investment. The value of bottles can appreciate significantly over time, but it’s essential to be patient and knowledgeable.
Join whiskey enthusiast groups, attend whiskey tasting events, and engage with fellow investors. Networking can provide insights and access to valuable opportunities.
How Much Does It Cost to Invest in Whiskey?
The cost of investing in whiskey can vary depending on several factors such as:
- Type of Whisky: Some whiskies are more rare and valuable than others. For example, single malt whiskies are generally more expensive than blended whiskies.
- Age of the Whisky: The older the whisky, the more valuable it is likely to be.
- Brand and Reputation: Some distilleries are more renowned than others. For example, Macallan and Glenfiddich are two of the most popular distilleries in Scotland.
- Market Conditions: The price of whisky can fluctuate depending on supply and demand. It’s important to buy whisky when the market is favorable.
- Rarity: Limited availability or unique characteristics, such as being from a closed distillery, can significantly increase the cost.
- Auction and Secondary Market: Investing in rare or collectible bottles often involves purchasing from auctions or the secondary market, where prices can be influenced by competitive bidding.
The entry price for investing in whiskey can range from a few hundred dollars to several thousand dollars or even more. For instance, a bottle of Yamazaki 55 year old can cost about $881,000, while a bottle of Kirkland Tennessee whiskey can cost $50.
Best Whiskeys to Invest In
There are many popular and well-performing investment whiskies. The best whiskey to buy for investment in 2023 include:
- Single Malt Scotch Whisky: Single malt Scotch from renowned distilleries like Macallan, Ardbeg, Glenfiddich, and Bowmore often hold value due to their quality, reputation, and limited releases.
- Japanese Whisky: Japanese whisky gained international recognition and popularity over the past couple of decades. Brands like Yamazaki, Hibiki, and Karuizawa have become highly sought after by collectors.
- Limited Edition Releases: Whiskey releases that are limited in quantity and often come with unique packaging, commemorative editions, or collaborations can appreciate in value due to their exclusivity.
- Closed Distilleries: Whiskey from distilleries that are no longer in operation can become valuable due to its rarity. Examples include Port Ellen and Brora in Scotland.
- Age-Statement Bottles: Whiskey with specific age statements (e.g., 18 years, 25 years) can be appealing to collectors and investors. Older whiskies are generally rarer and can command higher prices.
- Bourbon and American Whiskey: High-quality bourbons and American whiskeys have been gaining popularity and value. Brands like Pappy Van Winkle, Buffalo Trace Antique Collection, and limited releases from distilleries such as Willett have seen appreciation in value.
- Irish Whiskey: Irish whiskey has been experiencing a revival in recent years, and certain limited editions or well-established brands might hold investment potential.
- Independent Bottlings: Whiskey bottled by independent bottlers can offer unique flavor profiles and limited availability, making them attractive to collectors.
- Whiskey with Historical Significance: Bottles with historical significance, such as those associated with a particular event or period, can attract attention from both collectors and investors. They include Old Grand-Dad, J.W. Dant, and Old Vatted Glenlivet 1862.
Whiskey Investing Platforms
Whisky Invest Direct is a platform that gives private investors access to the market for wholesale maturing whisky. Before Whisky Invest Direct, only distillers and other industry participants could trade maturing whisky and benefit from the returns it typically offers. Now, private investors can buy and sell maturing whisky on the same platform as professional participants such as distillers, blenders, and bottlers.
There are several platforms and avenues for investing in whiskey. Here are a few examples of whisky companies to invest in:
- Whisky Auctions: Online whisky auctions are a common way to invest in rare and collectible bottles. Platforms like Whisky Auctioneer, Scotch Whisky Auctions, and Whisky Hammer allow you to bid on and purchase bottles directly from sellers.
- Whisky Investment Funds: Some companies offer investment funds specifically focused on whisky. These funds pool investors’ money to acquire rare bottles, and potential returns come from the appreciation in the value of the whisky. Examples include The Single Malt Fund and The Whisky Corporation.
- Whisky Investment Companies: Certain companies specialize in whisky investments and offer services to purchase and store whisky on behalf of investors. They often curate portfolios of bottles with investment potential. Examples include Rare Whisky 101.
- Fractional Ownership Platforms: Some platforms allow you to buy fractional ownership in bottles of whisky. This allows you to invest in high-value bottles without needing to purchase the entire bottle. WhiskyInvestDirect is an example of such a platform.
- Whisky Brokers: These are entities that facilitate the buying and selling of whisky, often including rare and limited-edition bottles. They can provide guidance on market trends and investment opportunities. They include Mark Littler and Spiritfilled.
- Collector and Whisky Enthusiast Forums: Online forums like Whiskybase and Whisky Advocate have communities of collectors and enthusiasts who discuss investment opportunities and share insights on valuable bottles.
- Peer-to-Peer Trading Platforms: Some platforms facilitate direct trading between individuals who want to buy or sell whisky, similar to a marketplace. One such example is Cask Trade.
- Physical Whisky Investment Companies: Some companies offer the opportunity to invest in whisky casks. Investors purchase a cask of whisky that is then aged and eventually bottled. The whisky is stored in a bonded warehouse until maturity. Examples include The Scotch Whisky Experience’s Cask Ownership and Whiskey & Wealth Club.
Exploring the Possibility of Investing in Whiskey
If you are considering exotic investments, whiskey investments may catch your interest due to its potential as a lucrative investment choice. The value of premium whiskey has been on a consistent upward trend, making it an enticing option. Various online platforms facilitate whiskey investment. However, it is strongly recommended to prioritize highly liquid assets such as stocks, bonds, indices, and ETFs before delving into whiskey and other luxury products. It is also essential to dedicate a substantial amount of time to learning more about whiskey before making investment decisions.
In summary, while investing in whiskey can be an enticing opportunity, it is crucial to understand and evaluate the associated risks. Factors such as delicacy and fragility, illiquidity, the long-term nature of the investment, and external market influences must be carefully considered before entering the whiskey market. Conducting thorough research, seeking advice from experts, and diversifying one’s investment portfolio are prudent strategies for navigating these risks successfully.
Whiskey investment guide FAQs
Can you invest in whiskey?
Yes, you can invest in whiskey as an investment asset. Whiskey investment involves purchasing bottles or casks with the intention of selling them later for a profit.
Is whiskey a good investment?
The returns on whiskey investments can vary depending on a number of factors, such as the type of whiskey, the age of the whiskey, the distillery, and the market conditions. Investing in whiskey can offer lucrative opportunities. However, it also carries certain risks that you should be aware of.
How do I invest in whiskey casks?
There are a few ways to invest in whiskey casks or barrels. You can buy casks directly from distilleries, work with brokers who specialize in cask sales, or use crowdfunding platforms designed for this purpose.