The investment power of whisky – a guide to how and why to invest
Whisky is not only heaven for the palate, but it can also be a safe haven for your portfolio. To start investing in this fine alcohol, it is necessary to deepen your knowledge by tracking market trends, reports, reading the professional press, and monitoring thematic forums. Why you should expand your portfolio with whisky and what criteria it should meet to be worth investing in? You will learn it from the article.
Investment in whisky – does it pay off?
Investors are diversifying their portfolios and looking for newer and newer investment options. Art, jewellery, classic cars, and real estate are classic investment items. Can investment whisky beat them?
The power of whisky as an investment asset has begun to grow since the last global financial crisis of 2007–2009. In times of economic and political uncertainty, rare and mature whiskies can be potentially lucrative long-term investments. At a time when the valuation of almost every asset was falling on its head, whisky turned out to be one of the more resilient to market fluctuations. Since then, interest in this market has been growing around the world. The last decade has shown that whisky can be added to the list of “luxury goods.” As the data shows, “liquid gold” is one of the most investment-profitable alternative asset classes! The Rare Whisky Icon 100 Index, which examines the price of the 100 most desirable bottles of whisky, has achieved an increase of more than 495% over the past decade.
According to an analysis based on data from the Knight Frank report examining wealth and investment data in 2022 and the Rare Whisky Apex 100 Index, whisky has grown in popularity as both a liquor and an investment opportunity. In 2021, the whisky market was valued at $79.6 billion and was projected to grow to $109 billion by 2025. Over the past 10 years, the investment market for whisky has grown 428%, outpacing the investment market for antique cars (up 164%), wines (up 137%) and luxury watches (up 108%).
6 things to be considered when choosing an investment whisky.
The primary challenge of an investment strategy is deciding on a whisky that is a worthwhile investment. Most investors will look for extremely rare bottles, as shortage increases their value rapidly, or search for limited edition series. Below, we discuss the aspects to look out for when choosing whisky.
- Where to buy it?
Investment whisky is not bought in a regular shop. Even the most expensive spirits in the supermarket are not investment grade. According to the standard law of supply and demand in luxury goods, the fewer goods there are, the more unique they become and the more they are worth. Many of the rarest whiskies hardly ever go on sale, so when they do, there is a massive demand for them. Therefore, publicly available bottles have no investment value, even if they are labelled 'Limited Edition'. Whisky is unique when it comes from a particular bottling, a reputable distillery, or a cask that has gained notoriety for some reason. Investment whisky is best bought through dedicated portals or shops selling luxury investment spirits. Then we have the assurance that the spirits will have the required certificates.
- Single malt of blend?
It is recommended to invest in single malt rather than blends of different malts. Single malt whisky is produced from barley – a grain that is difficult and expensive to grow. It is the product of a single and specific distillery and therefore contains whisky made in one place. Each bottle is unique. Its colour, aroma, and taste will reflect the local ingredients, the production process, and above all, the casks used to age it. These elements, among others, determine the final taste of each drink. There are varieties of single malt, such as single barrel or single cask, indicating that the whisky comes from a single cask. Blended whisky, on the other hand, is a mix of single malt and grain whiskies made from distillates of cheaper cereals.
- Limited and special editions
Investors and collectors particularly love limited editions from established producers. The small supply of these series ensures increased demand and influences the high asking price. Often, distilleries release a series of special whiskies that form a collection over the years. Owning all the bottles in the series means the collection’s value has a chance to increase acutely.
- Reputable distilleries
Investment whisky should come from reputable distilleries. Whiskies from established distilleries receive good critical acclaim and are monitored by inspection bodies. Vintage, rare whiskies released in limited editions are being snapped up by collectors and lovers of the spirit worldwide.
- The pace of investment in whisky
Alternative asset prices are rising strongly, and the bull market in investment whisky has been going on for several years. However, it should not be forgotten that whisky prices do not get more expensive in one month or even one year. It is an investment for years, and you should buy your first bottles with that in mind. Investors hold valuable whiskies for several years as they increase in value and then sell them with a profit.
- Whisky storage
Once you have found a promising bottle, preferably from a collector's limited edition single malt (and especially single cask) whisky from a well-known distillery, in specially created packaging, it should be properly cared for. Proper storage of the spirit means protecting it from sunlight and excessive heat. That is not always possible in a domestic environment, so it is worth searching for companies that store spirits professionally.
How much money do you need to have to start investing in a whisky?
It is a myth that you need to have millions to start the adventure of investing in whisky. The initial investment does not have to be large. You can buy a bottle of whisky for just a few hundred dollars, and for a few thousand, you can already build up a small collection. However, it is advisable to do meticulous research first, and take advice from specialists in the field. Knowledge, experience, and tradition are the keys to the world of investment in fine whisky. It is also advisable to seek the expertise of specialists or apply to professional services that sell whisky.
Before you buy your first bottles, you need information about every stage of your investment: selection, storage, and liquidation. To keep up to date with trends, it's worth following Rare Whisky Apex 1000, a database that allows you to index your bespoke bottle collection and track its value over time. Unfortunately, Rare Whisky Apex 1000 does not disclose which bottles it aggregates into its index. The full list of bottles that are included in the index can be viewed on another Rare Whisky Icon 100 website. This index tracks the price behaviour of the 100 most desirable investment whiskies. These are extremely rare bottles that are often priced very high. Here you will find bottles such as The Macallan 1926, which sold at auction for USD 1.5 million in 2018 and already for USD 1.9 million in October 2019, or the GlenDronach 50-year-old edition, which sold for £40,000 at its first auction.
You can also invest in tokens for an even smaller initial amount. Purchasing tokens allows you to enter the exclusive world of luxury goods with very little investment. Thanks to modern blockchain technology, investing in whisky has become simple and accessible to anyone in any part of the world.
The market for alternative investment goods continues to grow, and whisky, with its high-growth rates, holds a special place in this category. As indicated by whisky indexes, prices have been going up almost uninterruptedly in the last years (on average, 25% per year). Every experienced investor knows that a portfolio should be diversified. Undoubtedly, whisky is an option worth considering. Investing in luxury alcohols can be very lucrative, as recent years have shown.