At this stage, we must point out that the whisky market is completely unregulated. But if you’re interested in getting involved in this exciting asset class, please read on.
So, just how do you invest in whisky? Well, you could build your own distillery and launch your own brand. You could also simply buy shares in one of the multinational companies operating numerous distilleries around the globe. However, the first is not realistic, and the second idea is not particularly exciting. So, for the private individual who wants access to this multibillion-dollar industry and more control over their investment, there are two main routes for the private investor to start investing in whisky.
The first is to invest in rare whisky bottles. Now, we need to be very clear here: these are not the kind of bottles you will find on liquor store shelves or for sale via Amazon.
These are rare bottles with history and heritage. They are likely to have been produced by a renowned distillery, have an age statement, been bottled at cask strength, or maybe part of a limited edition with a small number of bottles released. They may also have been distilled by a distillery that is now closed, or what we refer to as a ‘silent still’.
For example, my first ever ‘investment grade Scotch bottle’ was a 21-year-old Rosebank distilled in 1990 and released by parent company Diageo under their annual special releases series in 2011. I chose it because it had all the attributes of a bottle likely to appreciate in value, namely:
A respected brand. Before closure, Rosebank was called the Queen of the Lowlands by whisky enthusiasts, and its triple-distilled spirit was a firm favorite amongst whisky drinkers. Rosebank was a silent still at the time. The distillery closed its doors in 1993, which meant that there was a finite amount of this spirit left maturing in cask. And when it’s gone, it’s gone. For the late whisky guru Michael Jackson, who never doubted Rosebank was [and is] one of the greats, it was “a grievous loss” when the distillery closed.
It has a good age statement at 21 years old.
It is a cask-strength whisky, which is far more desirable to serious whisky fans than spirit, which has been watered down to 40% abv.
This bottle was part of a limited edition, with just 5,886 bottles released.
This ticked many of the boxes to make it an IGS (Investment Grade Scotch), and so with some trepidation, I purchased two bottles priced at £167 each. An amount of money I thought was ridiculous at the time. But these bottles were not bought to be drunk. They were seen as investments back then
And as I sit here and write this in the morning of Saturday, March 30th 2024, I see that Royal Mile Whiskies in Edinburgh have these bottles for sale priced at £1,695 each, and other specialist retailers have them priced even higher, so I guess I’d identified the correct attributes needed to spot investment-grade bottles.
Many further bottle investments would be made, paying attention to the more sought-after distilleries such as the ‘Holy Trinity of silent stills at the time. Brora, Port Ellen, Rosebank, and bottles from Springbank and The Macallan. But only bottles ticking many of the boxes mentioned above. At Cask Capital, we will only list bottles with history and heritage that match the criteria we have specified and only at sensible market prices.
Next, we come to whisky casks.
Walk into a specialist whisky retailer and peruse the stock on the shelves. Pay particular attention to the price differences between different aged whiskies from the same distillery. It’s no surprise that a 15-year-old will be more expensive than a 12-year-old. But do notice that there will be a significant jump in pricing when looking at an 18-year-old bottle. This is because whisky increases in value exponentially. Put simply, the older it gets, the rare it becomes and thus the more valuable it becomes.
£76.95 | £145 | £310 |
*Prices from The Whisky Exchange 30/03/2024. |
This is what makes cask investment so exciting and arguably less risky than investing in whisky bottles. In very simple terms, a distillery distills what we refer to as NMS (new-make spirit). This liquid cannot legally be called whisky until it is at least three years old.
Casks are filled with new-make spirit and left to mature in bonded warehouses throughout Scotland until enough flavor and color from the wooden cask has imparted the whisky, and it’s ready to be bottled.
The older a cask is, the more valuable it will be. Most Scotch whisky is bottled at the age of 10 years, so casks older than this can increase in value due to their scarcity. They also become more desirable to independent bottlers who seek to add rare whiskies to their product range.
And this is why it makes sense to buy a cask of new make spirit for those new to cask ownership. You have the ability to get involved with a low price point by selecting a cask under three years of age so that you have plenty of time for it to mature and increase in value.
Also, for those with larger budgets, we have a large range of old and rare casks from some of Scotland’s most desirable and sought-after distilleries, some of which are now proving to be very rare indeed due to their age.
However, private individuals interested in cask ownership can find it challenging to find useful information about cask ownership. They struggle to understand what distilleries to buy from and which to avoid. Brand is key here, and your cask will eventually be bottled to be drunk. When exiting your investment, it is crucial that you pick a brand from a distillery that is desirable to independent bottlers.
Cost is also incredibly important. Unlike bottles regularly traded at specialist auction houses whose sales data is in the public domain, there is next to no historical cask sales data. Indeed, it is not in the cask investment company’s interests to show you all of their pricing. But here at Cask Capital, once registered, you will note that our pricing is open and transparent. You will also see that our cask prices clearly show what storage and insurance are included. And, of course, you will also note that we only sell casks from reputable distilleries producing whisky that is desirable to independent bottlers and, of course, whisky drinkers.
We do not, and we will never, offer casks of whisky, which, in our opinion, have mostly been distilled purely for the investment market and not to be bottled and drunk. These can include Distillery ‘B brands’. Sometimes called trade spirit.
But beyond our in-house whisky expertise, what more do we have to offer? Simply put, access and guidance. By developing a user-centered marketplace, we aim to disrupt the current status of the whisky investment market. We believe that transparency and accountability are what the industry needs to reach a higher level.
Cask Capital’s marketplace will use the tokenization engine created by DLA Piper, called TOKO. Powered by Hedera, our marketplace provides unparalleled tokenization of whisky casks and bottles, ensuring seamless performance, security, and compliance. Whisky enthusiasts and investors can explore our diverse offerings and start their journey as whisky collectors. Each purchase creates an NFT (Non-Fungible Token), which represents the item bought. Additionally, tokenization of casks and bottles offers 24/7 trading capabilities on our community marketplace.
By leveraging the Hedera Token Service (HTS), Cask Capital is able to issue and manage these tokens efficiently and securely on a public network, reducing the need for slow and expensive intermediaries. Additionally, HTS offers built-in compliance configurations, including KYC verification and supply management, to meet regulatory requirements. Cask Capital's use of TOKO and HTS allows for greater liquidity and accessibility in the whisky investment market, benefiting both investors and issuers.
Our service doesn’t end there, though. As we often state, to reach the full potential of your whisky cask investment, it needs to be bottled and drunk. That’s why one of our key services is bespoke bottlings. Whether you want to have your own collection of bottles for a celebration or want to provide your whisky club with a new taste, we are here to make sure your whisky gets poured into a glass.
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