Investing in whisky
Whisky is becoming an increasingly popular collectible, well-established in the Western world and rising in popularity in emerging economies such as China and India. Rare whisky is considered a symbol of status, wealth and prestige, particularly in emerging economies with burgeoning middle classes and many new millionaires.
Like fine wine, whisky is now regarded not only as an investment, but as an asset that can be enjoyed. Many buyers, particularly the Chinese, are consuming whisky as well as investing in it for the long-term.
The finite supply of investment-grade whisky (only so much is produced a year) combined with increased consumption, mean that it is becoming rarer.
With a steadily expanding market, this will inevitably lead to higher prices for whisky, leading to better returns on investments.
Increase in markets
The number of people investing in whisky has recently grown in the BRIC countries – Brazil, Russia, India and China – and this rise, along with a renewed enthusiasm in the USA has led to significant expansion in the size of the whisky market in recent years.
Despite the global economic recession, global exports of whisky were worth £2.8bn in 2007, while exports of Scotch whisky exceeded one billion bottles in 2009 – the first time in the industry’s history.
Asia has had the biggest influence on the market. In 2007, Singapore – a hub for distribution in Asia – imported 47 million bottles of whisky, a 121% increase on 2006.
181 million bottles of whisky were sold to Asian buyers in 2009, equalling a 17% increase; most notably, sales to South Korea and Japan increase by 26.5% and 32.9% respectively.
Although China is a relatively new market for whisky, it has experienced significant growth. In 2010, the Hong Kong Vinexpo Wine and Spirits exhibition attracted 880 exhibitors from 32 countries, with an estimated 12,000 visitors.
Later in the same year, the British and Chinese governments agreed an historic deal ensuring only whisky of Scottish origin could be sold as ‘Scotch’ in China, an agreement that is expected to double sales of Scotch in the country.
India has also made a massive contribution to the growth of the whisky market. In 2009, 75 million nine-litre cases were consumed by Indian buyers, and in 2010 Scottish whisky exports to India were expected to rise by 25%.
Overall, sales to the Asia-Pacific accounted for 50.6% of total global spirits consumption in 2010, underlining the impact the region has had on the spurt in global whisky investment.
The US remains a robust market for whisky, with imports up 13% to £419m in 2009. Like China, Brazil is fast becoming a prime whisky investment market, which saw 17% growth in imports the same year.
Most valuable investments
For anyone investing in whisky, there are several things to consider.
The most valuable whisky has generally been aged longer, produced in a notable year or is sourced from an old and reputable distillery, such as Ardbeg, Bowmore, Macallan or Springbank.
Generally, Scotch whisky tends to attract higher prices than others – for example Irish, American or Japanese whiskeys.
There have been a number of notable sales of whisky in recent years, underlining the upward trend for the industry.
2007 was an excellent year for Christie’s, auctioning several whiskies for high prices. Three bottle of 1964 Black Bowmore realised $18,000, a single bottle of 1926 Macallan made $54,000, while a collection of 729 bottles was sold for $102,000. In 2009, a Dalmore Oculus sold with huge publicity for £27,600.
More recently, in 2010, Whyte & Mackay set a new record for a single bottle of malt whisky, selling two bottles of 64-year-old Dalmore Trinitas for £100,000 each. It was the first time a six figure sale had been achieved for a single bottle of malt.
The same year, two Macallan whiskies – 50 and 55 year old respectively – stored in Lalique decanters, outstripped their initial estimates to sell for £9,000 and £6,480.
Where to buy
Investment-grade whisky may be bought from various outlets – primary examples are specialist dealers, direct from a distillery or from an auction house.
Martin Green, Bonhams Head of Whisky, made the following recommendation:
“My advice is to go in at the low end of the market, keeping an eye out for limited edition small runs. But these are snapped up really quickly so you have to be on the ball and make a swift move. Consider this as a long-term speculative investment, say over 10 years. Don't expect to make a quick buck.”
Researching the markets
When investing, it is vital to do some research. There are many whisky tasting and appreciation clubs and societies spread across the globe. These can provide information about the rarest and most desirable types of whisky, which could make an excellent long-term investment.
Distilleries provide extensive detail about their whisky production and ageing processes – again, it is vital to know about this information when deciding what whisky to invest in.