The value of whisky as an investment has been steadily increasing over the last decade, becoming the leading luxury asset class and enjoying a significant price increase.
The Knight Frank’s Luxury Investment Index (KFLII), which tracks the performance of a theoretical selection of collectable luxury asset classes such as art, classic cars, coloured diamonds, and fine wine, using existing third-party indices, shows that the overall value of the secondary market for rare whisky has grown by an astounding 586% over the past ten years.
There are several principle reasons for this, including:
A growing appetite for fine and rare whisky
Emerging whisky markets in Asia, especially China, has driven a huge rise in demand for rare whisky over the last few years, with rare whisky becoming a preeminent status symbol and collector’s item.
The increasing number of whisky investment funds
Investment in rare whisky has traditionally been very much a “hands-on” activity requiring extensive knowledge and experience. The launch of specialist investment companies offering exposure to the market via high net worth individuals makes it easier for people who are not already familiar with the industry to participate.
The consistency of the return on investment – over the last decade whisky has proven to be a consistently profitable investment, offering excellent returns on investment.
Whisky’s status as a consumable
Unlike other traditional commodity investments, such as art and cars, whisky is inherently consumable. While some bottles are bought to fill out a collection, others are opened and drunk, reducing the number of bottles on the market and increasing the price of the remaining bottles.
The cask or bottle investing options
Unlike a lot of other investments, whisky has two viable investment streams. While much of the focus is on the bottle market, there are huge advantages to investing in cask whisky, the most obvious of which is that whisky in the cask continues to age.
Which is to say that bottle of Macallan ten-year will always be a bottle Macallan ten-year, but a cask of Macallan ten-year will be a cask of Macallan 20-year a decade later, with a commensurate rise in price and demand.
Whisky’s reputation as a ‘safe harbour’ investment
During global Black Swan events, like the current pandemic, which almost always have a disastrous effect on the global economy, the Whisky market has consistently suffered less and recovered faster than any other traditional asset class, making it a safe harbour for wealth preservation during times of economic turmoil.