Investing in Rare Malt Whiskey
Malt Whiskey: Is This the new Wine?
Financial analysts in 2009 pointed to the performance of investments in vintage wine, as a safer and more profitable venture than traditional blue chip companies. Vintage wines and champagnes have a proven market value and if the asset is kept in optimum condition, it has an earning potential that is almost unrivaled. These kind of commodities have been shown to outperform the stock market in their returns. The assets obviously will reach a higher price when the economy is booming and its ultimate consumer will ironically enough, be those fund managers celebrating their financial success and magical foresight.
This has already been proven as in 2010 within a London restaurant four major financial traders sat down for a remarkable lunch. The four investment bankers managed to run up a bill that came to £96,400. The bottles of wine they consumed from the eateries wine cellar totaled £96,000. The bankers got their meals gratis due to the amount they had spent on only four bottles of vintage wine.
The question we must ask ourselves is, could a similar level of performance be matched by investment in Malt Whiskey?
Is Whiskey a Good Commodity?
Before we dismiss the idea out of hand that Whiskey can have the same appeal and potential for increasing its net worth. Let us examine some interesting facts.
*Both wine and vintage champagne have continued to increase in value, year by year.
*If a wine or champagne had been rescued from a sunken wreck, it has a greater value even if it is undrinkable.
*A single malt whisky by the bottle is almost as expensive as some of the higher end wines which are available either online or from reputable wholesalers of beverages.
I must clarify that single malt whisky is usually distilled on one of the Scottish Islands or in the Scottish mainland. Single malt is very different to the blended whiskey or scotch you see on optics in pubs (these include brands such as Bells, Grants and Whyte & Mackay). When referring to wine, I am referring to wines over 5 or 6 years old at least, and generally the higher end wine is sealed with a natural cork rather than a plastic bung.
To prove whiskey is a viable commodity, I came across this recent small story concerning beverage company Diageo. Diageo has recently come up with a novel initiative to plug its pension deficit that will see it use barrels of Whiskey as collateral.The company, owner of the brands Johnny Walker and Bushmill's whiskey announced it had agreed a funding deal to transfer £500 million worth of maturing whiskey to trustees of its pension scheme. This would be sold back at a later date but generally capped to a mutually agreeable figure. Here is a potential investment opportunity as if the whiskey is ever bottled it has a unique story attached to it.
Investing in Whisky
Whiskey/whisky has it roots in many different cultures and countries. Both Ireland and Scotland have a long history of production. They have become a valued and prestigious token of national identity. Elitist connoisseurs of single malt will use their favoured products as the benchmark of greatness, in a similar fashion to how new world wine was once treated.
The brands of whiskey and bourbons from USA, Canada, Australia or Japan cannot be overlooked for ground floor investment opportunities. Worldwide consumption of Whiskey is still strong with India and China been large markets.The drink is consumed in over 200 countries and the amount of whisky sold per year is massive. In Scotland, whisky is a massive contributor to the GDP of the nation and helps employ thousands in its supply chain as well as at the distillerys.
Rare Malt Whiskey
Still not convinced? Well let's see if we can change your mind. The following couple of bottles of fine single malt might persuade you. These single malts are less than 70 years old and if you compare them to relevant vintages in the wine world, I think that it is a really good comparison.
Bruichladdich Limited Edition 40 year old Whisky.
This whisky was distilled on the 24th October 1964.This batch was matured in fresh Bourbon casks and are now sold as the oldest ever from the Bruichladdich Distillery. What makes this whisky special is the fact that it is a limited edition of just 500 bottles. This means that each bottle is valued at and sells at a respectable ....£1,000 per bottle.
The Midleton 1996.
This is a very rare Irish Whiskey. It is triple distilled by the well known John Jameson & Son Distillery, where it is aged to perfection and then bottled. This whiskey was bottled in 1996. Each bottle is individually numbered and you should expect to pay about £250 per bottle.
Glenfiddich 1937 71 Year Old 70cl bottle.
This rare bottle of single malt whisky is 40% ABV. It was bottled at the distillery at Speyside. This single malt whisky is the rarest Glenfiddich that has ever been released. Just 61 bottles of spirit remained in the cask when it was bottled in 2001. At 64 years of age, it was also the world's oldest single malt whisky at the time of its release. As such, and coming from such a famous and well known distillery. It has become one of the most collectible whiskies ever released. This whisky continues to makes headlines around the world every time a bottle comes up at auction. This is because you must expect to pay upwards of £50,000 to own one of these rare bottles.
Latest Whisky Auctions a Success.
At the start of February 2018, it has been reported that UK private whisky auctions of rare single malts has seen a 75% increase in sales. The UK auction market alone in 2017 was worth £25 ($34.6) million. In 2016, the value of UK single malt whisky was worth £14.2 ($19.6) million. Increased interest from the Far East and Central Europe has been a major contributing factor to the rise. Experts within the trade are confident that 2018 will continue this upward trend will continue.
Currently, demand is exceeding supply and over a dozen Scottish distilleries have seen their prized bottles sell for over £10,000 ($13,829) per bottle.
A bottle of an extremely rare 62 year old Dalmore came on the market in 2017 and sold for £95,000 ($131,000). There are only another eleven bottles like it and they are unlikely to come to auction any time soon.
Keep an eye on rare malt whisky and you could see extremely good returns on your investments.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2010 Andrew Stewart