Whisky galore
The market for rare whisky has hit the headlines, but pitfalls await the unwary potential investor. For Knight Frank's latest Luxury Investments Report, independent advisor Charles Beamish tells Andrew Shirley how to collect wisely
Coincidence perhaps, but ever since I added bottles of rare whisky to the Knight Frank Luxury Investment Index in 2019, there has been a boom in the number of funds – a few reputable, many less so – touting single malt Scotch as a profitable place to put your money.
Their interest was piqued, no doubt, by the headline stats generated by our rare whisky index – 12-month price growth of 40% and a staggering 10-year rise of 582%. However, we track a small number of very rare bottles, and their performance is not necessarily a reflection of the wider market, including casks, that these funds were purporting to invest in.
But for the informed collector, whisky can certainly be a shrewd investment, so I've asked one industry expert for his five top tips on how to make the best decisions.
1. Understand the numbers - look behind the headlines to find out what is really happening.
When it comes to navigating the world of rare whisky collecting, it is crucial to seek guidance from independent experts who possess a comprehensive awareness of the market and can enable the buyer to undertake a meticulous approach when dealing with the industry.
Before making any purchase for investment reasons or otherwise, it is essential to reflect on the purpose behind it. Are you acquiring an item solely for financial investment or for the pleasure of collecting? I’d urge buyers to be attentive to the pricing trends at auction as sale prices continue to rise.
The 2021 Distillers’ One of One charity auction raised £3 million from 42 lots donated directly by 37 distilleries, including one lot selling for over £1 million. In the secondary and tertiary markets, where items have not come directly from the distillery, acquiring the prominent items in the market may not always be the most optimal choice.
Always research current pricing for the desired brand, looking at individual lot performance as well as the record breakers. If an auction estimate is too good to be true, then investigate why, just as you should do if it seems oddly high.
2. Funds - think hard before using
When considering investing via an existing fund, it is important to exercise caution as their promised results often fail to align with reality. Instead, it is recommended to collaborate with trusted advisors who possess a deep understanding and genuine passion for the whisky industry.
Given the unique nature of this commodity, it deserves to be treated as such. If you decide to engage with a fund, you must come prepared with the right questions to evaluate their approach thoroughly and the patience to undertake the necessary research on the provenance of the fund and its key people.
By taking these steps, you can navigate the realm of whisky funds with greater confidence and make informed decisions regarding your acquisitions.
3. Casks or bottles - consider which to prioritise
The purchase of casks enables you to select a specific vintage or taste profile that resonates with your personal preferences. It provides a personalised experience that caters to your individual taste. On the other hand, buying limited-release finished products in bottles may offer a less personal experience but often holds greater appeal to collectors in the secondary market.
In addition to this, purchasing a cask often grants the option to defer the bottling process to a later date. This flexibility allows for more control over the maturation process.
Furthermore, when you opt for casks, you may have the opportunity to personalise the bottles, creating a truly unique and memorable experience. This aspect makes it particularly appealing to collectors and individuals looking for distinctive gifts, adding to its value as a ‘passion asset’.
4. Understand new-make spirit - past performance is not a guide for future performance
It’s important to note that new-make spirit, which is often sold as an investment, is not yet whisky. It takes three years in cask before it can be classified as whisky and even longer to allow the liquid to mature. When purchasing new-make spirit, the resultant whisky is an unknown entity as there can be no way to guarantee how it will interact with the cask, its surroundings and develop once aging in the cask.
More to the point, future shifts in the market are unpredictable, with the potential for continued growth or stagnation. Therefore, investing in spirits from new or start-up distilleries with no track record for production should be done under caution, especially for those primarily seeking investment opportunities.
5. Fakes and forgeries - learn how to spot and avoid them
There are undoubtedly many fake whiskies found across the secondary market, and it is important to be proactive in checking a bottle before purchase, ideally in person or via a trusted agent that offers auction representation. Check bottle integrity, label condition and evaporation levels of any lot.
For example, a pristine label on a 50-year-old whisky bottle is rare, no matter the storage conditions within which it has been kept, while an original label on a modern-feeling bottle can reveal a fake. Seeing a label in a condition that does not match the supposed age of the liquid should always be a warning sign.
Whenever possible, acquire distillery-letterheaded paperwork confirming the provenance of the bottle or cask. This provides legal proof of authenticity. Consider working with an advisory firm that has direct connections with distilleries. Such a relationship can provide a cast-iron guarantee of the whisky’s authenticity and quality, eliminating the need for a middleman.
Firms like ours manage direct-to-distillery bottle and cask acquisitions for clients, which ensure end-to-end client management, pricing transparency and guaranteed provenance and authenticity.
The first few years for any new business can be challenging, and often, these distilleries lack credentials in terms of quality or historic brand performance. However, for individuals aiming to commemorate a specific date or occasion, acquiring young spirit can be a viable option, provided they are willing to take the long-term risk and wait for its eventual enjoyment at a later date.
The expert
Charles Beamish founded Beamish International, a global whisky office providing direct-to-distillery advice, assurance and access to the world’s most coveted Scotch whisky stocks for collecting, drinking and gifting, in 2018.
With over 17 years’ experience in the drinks and financial services industry, Charles’s disruptive investing within the wine & spirits industry has seen him recognised as one of the industry’s leading specialists.
Charles is a Freeman of The City of London, A Liveryman of the Worshipful Company of Distillers and a Commandeur de Bordeaux. Beamish International is programme sponsor for the second edition of The Distillers One of One auction in aid of the Distillers’ Charity takes place on October 5th at Hopetoun House, Edinburgh.
