During 2020, whiskey sales soared as investors turned away from volatile equities and weak bond returns, according to a report in What Investment UK. Cask whiskey retailers recorded a boom as buyers looked for an investment not tied to financial markets, and leading distilleries received an injection of capital to allow them to cover their overheads.
Whiskey casks are typically stored in warehouses for five to ten years, to allow for the maturation process. Therefore, value is not dependent on the current economic climate, which makes whiskey a very attractive option for investors. The relatively low number of casks produced during 2020 will also add to its rarity value.
According to Knight Frank, rare Scotch whiskey performed well in their luxury investment index (KFLII). Even during the pandemic turmoil of quarter one of 2020, it rose by 3%, with a previous 12-month average of 11%. Over the past 10 years, growth has been at a staggering rate of 586%, leading to rare whiskey being dubbed ‘liquid gold’.
Since whiskey was first introduced into the KFLII in 2018, it immediately became the market leader, outstripping rival sectors such as classic cars, watches, and jewellery. Knight Frank reports that a bottle of The Macallan distillery’s 1926 Fine & Rare sold for a headline-grabbing £1.2 million at Sotheby’s in October 2019.
The inews.uk website reports on a Scottish investor aiming to fund his pension. He said:
‘Here on the Island of Islay, people could willingly pay up to £500 for a bottle of whisky. For a £3,000 cask that produces 300 bottles, you’d be looking at a cost price of £10 a bottle. So I believe it’s a sound investment with the potential to make a good amount of profit.’
The investor, Scott Brown, plans to hold his casks for 15 to 20 years, confident in the expectation that they will only rise in value. He is also planning on passing two of the casks to his son when he turns 18, to either keep as an investment, or fund university or a house deposit.
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