Wine, art and now even non-fungible tokens (NFTs) are among the many asset classes available. However, whiskey casks are gaining ground in the market, with the Knight Frank Luxury Index reporting a 534% increase in value over ten years;
If you are a private investor looking for a big profit, this is the place. The rare whiskey market is improving year by year with age.
Due to recent instability in financial markets, investors have turned to more solid alternative investment opportunities, such as whiskey on tap. What was once a very exclusive industry has now become a possibility – when we started the cask investment company, our vision was to make whiskey investing accessible.
Our aim was to make the market more accessible to individual investors looking to buy premium whiskey at ultra-discounted prices.
How investing in whiskey works
The whiskey making process is both capital and labor intensive. Distilleries have to wait three to ten years after the whiskey ages before they can sell it at a profit. As a result, distilleries allow private investors to purchase casks that are still in the early stages of the maturation process, either directly or through an exclusive broker, to cover costs and raise capital.
Because of our purchasing power, investing through a broker brings benefits. We buy a considerable share of the casks from one distillery, which allows us to offer our customers wholesale rates from some of the largest distilleries and whiskey brands in Ireland and Scotland. When the investment has matured, the investor can choose to bottle it or sell it for a profit of 10-30% per year, depending on the exit strategy and market conditions.
Before a brand new alcohol can be considered whiskey in Scotland, it must have matured for at least three years. The longer it takes to mature, the more valuable and attractive it becomes. The quality of the whiskey and the waiting time an investor has to wait for its casks determine the return on investment.
Choose your whiskey
It is crucial to remember that not all whiskeys are the same. Blends, which are cheaper whiskeys, should be avoided for anyone wishing to invest. Blends typically only contain 10-20% malt or jarred whiskey, which reduces their value. It is generally better to invest in a single malt or a single pot still which is 100% premium. It is also crucial to invest in high quality whiskey casks. Whiskey is considered to be of good quality if it comes from a small batch distillery – one of our distilleries, for example.
Investors have a range of alternatives after the whiskey has aged a few years. They can sell their casks to distilleries looking to buy them back, sell them to other whiskey brands, independent bottlers, collectors and other private investors, or bottle them themselves.
Some individual investors prefer to buy mature stocks to avoid the extended maturation phase. Customers who want to buy a 15-year-old whiskey, for example, will pay a premium for a five-year-old whiskey and wait less than ten years for a significant return on profits.