VCL Vintners

WHISKY JOURNAL

WHISKY JOURNAL

A Defence Strategy to make money during recession

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A Defence Strategy to make money during recession

10 reasons why cask whisky can make money during this economic storm:

 

Tangible Asset– As a physical asset, Scottish single malt whisky casks are largely uncorrelated with the wider investment market. Geopolitical and socioeconomic factors ordinarily do not have the same effect on the value of wholly owned tangible assets in the way that they do stocks and shares. In short, whisky prices are not effected by current market condition in the way that stocks and shares are.

Finite Commodity– Unlike stocks and shares, whisky barrels are a finite commodity and are ultimately destined to be consumed thus increasing the value of the remaining casks equal in age and distillery. Whereas a company can issue stocks on a whim thus depleting the value of the pre existing shares, whisky from a particular year and distillery is unique in that it can never be recreated.

Store of Wealth– Whisky casks are a tangible, physical asset and are considered to be a store of wealth. Owners of them have complete autonomy over their investment and can feel safe in the fact that their cask is a unique and highly desirable asset. As such, it can be considered to be a safe haven in these times of economic uncertainty.

Tax Free– According to Scottish Law, all Scotch whisky casks have to be held in Scotland under bonded conditions. As a result, cask investment remains free from VAT or Duty. In addition, owing to the ‘angel’s share’ (evaporation) whisky can be deemed a ‘wasting chattel’ and therefore exempt from Capital Gains Tax.

Fully Insured– All whiskies held by VCL are fully insured up to their market value- additional security in these turbulent times.

Supply shrinking by the day- Due to the Covid19 crisis, whisky distilleries are being forced to temporarily shut down. With no new-fill whisky production, it is the widely held opinion that the value of pre-existing casks will increase. In addition, with the much reduced production levels of 2020 single malt Scotch whisky, it may result in it being an incredibly rare and much sought after age expression.

China’s Recovery– China has now contained the Coronavirus and its economy once again is beginning to flourish- so too is its thirst for Scottish single malt whisky. As the driving force behind Scottish single malt consumption, a robust Chinese economy means a robust whisky industry.

Sin Stock– Alongside tobacco, alcohol related investments are considered to be ‘sin stocks’ and are, historically speaking, considered to be far more resilient to recession than most other investments.

Low Maintenance– At a time when panicked investors are nervously checking the value of their stock portfolio as it yo-yo’s from bad to worse, investors into whisky casks can remain calm and level headed. They can feel safe in the knowledge that theirs is a fully insured, robust and stable investment, steadily ageing and accruing value in a HMRC bonded warehouse.

Performance Related Brokers– As performance related brokers, it is in the interest of VCL’s account managers to do well for you- unlike the greedy stock broker haphazardly recommending stocks and taking his commission on every trade with no vested interest in its performance.

Older, Rarer, Scarcer– The longer you hold on to whisky, the safer and more profitable the investment becomes. Ultimately destined to be consumed, whisky is a finite asset that increases in value with age as it develops new and complex characteristics and its supply becomes increasingly reduced.

Scotland’s No.1 Export– As Scotland’s no.1 export, Scotch whisky is an essential part of the UK economy and as such will always be shielded during times of economic volatility. This was evident during the last Government Budget, wherein the Chancellor opted to renege upon his commitment to increase Duty on spirits, instead choosing to freeze them in light of the current economic climate.

For more information on how to protect and grow your finances during this unpredictable time, please feel free to contact the team.

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