2020 represented a unique year for the whisky industry. The coronavirus pandemic did have an effect on whisky production and the auction market, but not all of it was negative.
While the impact of the pandemic certainly wasn’t anywhere near as devastating as it was to some other sectors, ScotchWhiskyAuctions.com did have a hiatus in their services due to Covid-restrictions.
With WhiskyAuctioneer.com also suspending some auctions because of technical problems and widescale distillery closures, the market did take a small dip. However, the number of bottles traded in 2020 did surpass the trading total for 2019 at 175 thousand bottles.
In addition, the Whiskystats Whisky Index (WWI), driven by the 500 historically most traded whiskies, recorded an impressive market 25 per cent increase over the course of 2020. By comparison, the WWI only increased by 1.2 per cent during 2019.
However, although more bottles were traded, the average price per bottle fell from 437 Euros in 2019 to 415 Euros.
While all these market movements are largely positive, the average and median prices are not especially useful for measuring either price changes or which whisky performed best during 2020. This is because they strongly depend on which bottles were traded.
Instead, we’ve collated the percentage growths of both the best-performing casks and the best-performing bottles of the 2020 market. The whisky cask figures are complied from our own internal data of cask values, whilst the whisky bottle figures come from statistics compiled by WhiskyStats.
Macallan emerges from 2020 as the best performer, with a significant lead in both the bottle and cask markets. The distillery, located on Speyside, rocketed to the top of the distillery list during the 2017 and 2018 Macallan Price Rally and has continued to trade strongly over 2019 and 2020.
The Macallan Lalique Six Pillars Collection No.2 increased from 76,000 GBP in December 2018 to 105,000 GBP just one year later. The record-setting Whisky Auctioneer’s December auction 2019 generated £2.6 million, £850,000 of which came from sales of Macallan bottles.
The recent sale of Macallan 1926 Fine and Rare, the first to appear at auction in more than a decade, recently sold a Sothebys for a record £1.45 million.
Far from experiencing a chilling effect, the impact of the coronavirus and wide-scale distillery closures has had a positive impact on the cask market. As production ceased, the value of the existing casks skyrocketed, resulting in the astonishing 95.87 per cent increase in the value of some Macallan casks.
That’s not to say that the bottle market is without its drawbacks. Since the largest whisky consuming markets in the world as the U.S and Asia, while the most popular distilleries are in the UK and Japan, there is often some measure of shipping between the seller and the buyer.
When shipping single high-priced items, damage is always a danger and certain bottles might have such a high value that they cannot be insured. Once the bottle arrives at its destination, there are also customs and taxes to pay, which can really mount up.
The primary difference between the cask and bottle market is that the whisky within the bottle discontinues it’s maturation process. Cask whisky continues to age, adding value that is not wholly linked to the popularity of the distillery.
The Cask Market
While the number of casks selling at auction has certainly increased over the last decade, cask whisky investment is still the lesser-known of the two markets. As many distilleries don’t sell whisky by the cask, it has traditionally been seen as somewhat of an insider’s market, shuttered off from general investors.
Thankfully, with rare whisky topping the Knight Frank Luxury Investment Index (KFLII), the interest in whisky as an investment option has led to more and more companies offering whisky cask investment options.
There are a number of benefits associated with the cask whisky market and investing into it.
Firstly, the market itself is still young, meaning that competition for casks has not reached its peak and, as you can see from the comparison above, significant price increases are a regular feature of the secondary market. The relative rarity of casks sold by popular brands also increased the value of the market.
While bottles need to be stored, casks are required to be held in government bonded facilities. This means the investor is not required to oversee the storage and security of their investment and that buyers are able to purchase with the security of knowing that the whisky is entirely authentic.
As we mentioned earlier, the value of bottled whisky is entirely dependent on the popularity of its brand. Cask whisky, however, continues to age and mature in a way that bottles do not. This adds another layer of value to cask whisky that is independent of its brand.
Winners of 2020: Macallan and the Cask Market
As you can see from the charts above, both Macallan and cask whisky has emerged from the tumult of 2020 as the clear winners of the whisky market. The Speyside distillery continues to be a dominant force in both the bottle and cask market with record-setting sales.
Cask whisky itself has seen huge price increases relative to the bottle market with the distillery closures motivated by Covid-19 restrictions only increasing to the value of the remaining casks.
Overall, Macallan cask whisky continues to be the value leader and best investment opportunity with a clear track record of stability during even the most challenging economic conditions.
Words by Tim Ashley, VCL Founder & Partner