The Whisky Show taking place in London during September 2019 is expected to attract a record number of investors, all keen to learn how to make money from investing in whisky.
Rare whisky bottles have risen in value by around 5% in the last year. However, according to the Rare Whisky Icon 11 index, over the last decade the price has witnessed a 500% increase.
The potential returns are of course very appealing, but investors are warned that investing in whisky and achieving profit is not guaranteed nor an easy process. Through auction, investors can expect to pay up to 30% in commission to the auctioneers. Also, not only are there many fake rare malts circulating the market, it is unregulated meaning if you are subject to a fraudster you can’t request any help from the FSCS (Financial Services Compensation Scheme). Due to these and many other reasons, it is vital that all investors go through a reputable broker.
The whisky investment market tends to focus on single malt whisky from Scotland’s most renowned distilleries as opposed to the blended whisky, which makes up around 90% of all Scotch that is consumed.
As it stands, the majority of investors buy into bottled Scotch rather than whisky in the barrel, with bottles of investment quality whisky starting at around £150. Once whisky is bottled it can be stored for many years and still taste very much the same even 100 years later.
In 2018, the world record for the price fetched for a bottle of whisky at auction was broken three times. In May, a 60-year-old Macallan sold for £752,000 and within an hour, another bottle of Macallan reached £814,000. Then in October another Macallan ‘Adami’ sold for £849,000. These bottles all had a common theme as they were illustrated by famous artists, which substantially contributed to the price of each bottle.
Alternatively, to purchasing bottles, investors can invest in whisky casks which are kept in bonded warehouses. Investing with this method allows the investor to avoid any VAT or duties if it is sold back to the distiller for bottling at a later date. Investors in whisky casks can expect around a 10% return per annum with certain brands reaching closer to 15%.
However, investing in whisky casks definitely requires the help and guidance of an established broker. If you wish to speak to us about the possibility of investing in whisky casks or bottles, please get in touch with the VCL Vintners team.