Among many whiskey connoisseurs, keeping bottles intact instead of using them for their intended purpose is considered an oddity. But with the rise in prices for collectible drinks, even they are increasingly trying to combine hedonism with investment behavior. There are reasons for this. The Knight Frank Rare Whiskey Index, which tracks the performance of rare Scotch single malt whiskeys, has risen 586% over the past 10 years and slightly surpassed even the NASDAQ, which rose 583% over the same period. Last year, with the onset of the pandemic, the growth rate, however, expectedly decreased: in the first quarter of 2020, the Knight Frank Rare Whiskey Index grew by only 3%, however, the NASDAQ fell by almost 12% over the same period.
One way or another, it is not surprising that the number of bottles sold only at auctions in the UK has grown from 20,000 in 2013 to 144,000 in 2019, analysts at Rare Whiskey 101 calculated.
Investment interest in whiskey is growing not only in the West, but also in China, Indonesia, India, Brazil and other developing countries. In particular, two years ago at the Bonhams auction in Hong Kong, the 50-year-old Yamazaki whiskey became the most expensive Japanese bottle ever sold at an auction: its price was about $ 343,000. which went under the hammer in London in 2019 for a historically record price of £ 1.5 million (approximately $ 1.9 million). Experts, however, are confident that this is not the limit and a bottle from the same batch, announced for auction in February 2021, will break through the $ 2 million mark.
Experts explain the increase in the cost of whiskey mainly by its limited supply on the market due to the peculiarities of the production cycle of the drink. “Whiskey distilleries cannot produce as many bottles as customers demand. Unlike wine, whose value is determined by the vintage and bottled within 16-24 months after harvest, the age of a whiskey is determined by the time spent in the barrel, ”explains Andrew Shirley, partner at Knight Frank. Under the laws of the United Kingdom and the European Union, whiskey is a grain distillate that has been stored in oak barrels for at least three years. “During World War II, British Prime Minister Winston Churchill, in response to the demand to direct all grain supplies for the country’s military needs, even said:“ We cannot stop supplying grain for the production of whiskey: the war will end someday, and we will not have whiskey ”, – remind in the Lindores Abbey Distillery company.
It takes a decade to produce a quality single malt drink, while exceptional versions take 15–20 years or more. For example, the 60-year-old Macallan in 1926 was not bottled, respectively, until 1986, says Christian Swantesson, founder of the investment fund The Single Malt Fund.
According to Shirley, the marketing strategy of the largest producers of this drink also affects the popularity of whiskey as an investment asset. “Companies like Dalmore and Macallan are diligently transforming their brand into a luxury product that should be on a par with works of art,” he says. “To this end, spirits are promoted in cinematography, whiskey producers sponsor art exhibitions and work with renowned photographers and models.” Celebrities, including the Metalica group, Bob Dylan, Drake and Conor McGregor, have also created their own trademarks – the latter earned more than $ 1 billion in the first year of proper Twelve whiskey sales alone. “The products of individual distilleries are growing by tens of percent annually. For example, Port Ellen whiskey, bought for £ 100 20 years ago, is now worth £ 2,000, ”experts at Lindores Abbey Distillery estimate.
However, it is important for investors to be vigilant and avoid counterfeiting. So, in 2017, a Chinese millionaire paid almost $ 10,000 for a 27-year-old Macallan bottled in 1878. However, the authenticity of the alcohol raised doubts among experts who noticed inconsistencies between the cork and the bottle label. Later, an examination showed that the whiskey is most likely blended and made after 1970. “The less often the bottle, the more often it is forged. Sky-high prices inspire confidence in the product’s reliability. Unfortunately, even auction houses and the reputation of a store or bar cannot always guarantee the reliability of goods, ”says Artem Peruk, creator of El Copitas Bar and Paloma Cantina cafe.
Novice investors, in addition to purchasing the final product, can invest in whiskey by purchasing units of investment funds that form their portfolios from companies producing this drink. Another option is to buy your own barrel. “The manufacturing company assumes the insurance costs for the first 10 years. When the whiskey is bottled, it can be shipped to the customer by sea, ”explains a spokesman for Lindores Abbey Distillery. Barrel prices start at around $ 11,000 and can go up to $ 700,000 depending on the type of drink. “Even if the distillery of your choice does not shoot as an independent product, that is, as a single malt, it will in any case be in demand as an ingredient for blending due to the huge demand for whiskey as a category,” Lindores Abbey Distillery is sure.
Jay Bradley, the founder of the investment company Whiskey & Wealth Club, also emphasizes that the pandemic has become an extremely important time in the history of the alcohol industry: “Whiskey produced in 2020 will be incredibly rare as its production has been temporarily suspended worldwide due to the coronavirus. It is logical to assume that in 15 years the whiskeys of the covid year will be especially valuable. “
In any case, even if the bottle purchased as an investment asset does not justify the investment, you can always open it and “celebrate” an unsuccessful deal. “This Plan B is always in the head of every collector,” sums up Swantesson.