VCL Vintners



Irish Whiskey: is it worth a punt?

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Irish Whiskey: is it worth a punt?

The Irish whiskey market is receiving more coverage of late. At VCL, we have always been ahead of the curve relating to investment opportunities within the spirits sector. Therefore, we feel obliged to give an honest appraisal of Irish single malts as an asset by evaluating their growth potential.

I enjoy and I have been aware of Irish whiskey for many years. As a child, I remember annual trips to buy my father his Christmas bottle of Redbreast. Whilst there are many Irish whiskey consumers globally, you would probably struggle to find anyone who could recall any other Irish malts aside from Jameson, Bushmills, and the Redbreast- none of which are currently available as casks for investment. Yet there are more Irish single malts available today than ever before, as well as companies offering casks. But is it a good area of investment? To begin with, I can say that VCL has passed on several opportunities to add Irish single malts to our investment portfolios and there are a few reasons for this decision. 

VCL is a specialist in single malt Scotch. There we said it! We have no issue with nailing our colours to the mast on this, and it is with good reason. More Scotch whisky is consumed across the globe than American, Canadian, and Irish whiskies combined, and it is the world’s number one internationally traded spirit. 

We evaluate the strength of a market not on geographical location but on the statistical analysis. There has been plenty made of the success in recent years of Irish malts in America, some of which are accurate. However, the numbers do not give the full story. In 2019 the total exports for Irish whiskey were €727m which, on face value, sounds impressive. By contrast, in the same year Scotch exports were over eight times that amount at a whopping £4.9bn. Besides, 40% of whiskey from Ireland went to America, whereas the US market only accounted for 20% of Scotch exports. Numbers from Scotland to Europe were twice that of Ireland and this trend is reflected globally. Scottish single malt appeals to a global audience of over 180 countries and is not beholden to one export market for its success. This, in turn makes it a far more appealing and secure investment avenue. 

A genuine investment market needs a level of robustness to succeed, regardless of industry trends. 2020 will be a year defined by COVID-19. From an investment perspective, all markets will suffer during a global pandemic (except for certain areas like PPE and pharmaceuticals). 

The Scotch whisky industry has provided reasons for optimism. Although initially, Scottish whisky exports experienced a dip, they still retained a value of around £4bn, equating to approximately 36 bottles of Scotch single malt being shipped per second. An impressive amount during a global pandemic- my guess is we have all needed a drink! Similarly, the Irish sector experienced a decline of around 26% but the market’s total exports numbered only €620m.

Finally, pricing. Value is the true cornerstone of any investment vehicle and some of the cask prices quoted for ‘new make’ Irish spirit can be eye-watering. It is also true that some of the newer Scottish distilleries are unjustly pricing their ‘new make’ at the top end of the market. However, it is for this reason that VCL are very selective with the distilleries that we choose to work with. Often, we are approached by new, largely unknown distilleries asking for exorbitant sums for their new fill liquid. With very little market share or trading history, our approach is simple- the lack of either means the possibility of growth is not assured and therefore we would not recommend them for our client’s portfolios. 

VCL offers investors the opportunity to acquire casks from Scotland’s top distilleries, including The Macallan. For all the hype and marketing associated with Irish whiskies, the market occupies a fraction of Scotch single malt. 

Whilst the sentiment is positive, the unavoidable variables (such as target markets and quality of liquid) means that for now, VCL will continue to source and recommend only the finest single malt casks of Scotch. With a total export value of €727m, the Irish whiskey sector is one that VCL will not be having a ‘craic’ at just yet.