Over the past 12 months it’s been a hugely controversial subject which has divided many well-known whisky writers and journalists. Whisky being used as an investment isn’t something new. However, with some of the recent gains being seen, it’s had a lot more press and PR recently.
This isn’t about buying a cask of whisky – that’s usually a very difficult thing for anyone other than the distilleries to make any money from. It’s about full, sealed bottles of predominantly single malt Scotch whisky. Unlike wine, Scotch doesn’t generally go off, so if kept in the right conditions, a bottle of whisky can outlast the average person.
So why has Scotch gained a lot more press recently as an investment? Like a lot of recognised alternative investments – such as art, wine, precious metals and even children’s toys – whisky is something which has a massive worldwide following. With increasing numbers of whisky collectors seeking out a diminishing number of rare bottles, supply and demand is forcing rapid price increases.
It’s these price increases that have brought whisky to the foreground. The top 250 bottles of single malt Scotch increased in value by 123 per cent from 2008 to the end of September last year. The top 100 increased by 163 per cent and the top 10 by a staggering 298 per cent. These are auction values so buyer’s/seller’s commissions need to be factored in (data source Whisky Highland).
Now, I’m clearly a whisky investment consultant and independent valuer, so many would argue it’s in my interest to be extolling the virtues of Scotch as an investment. As an independent (not tied to any distillery) I always point out that you can get it very, very wrong.
Unless you know the market inside out, the likelihood of making losses is a stark reality. On the flipside of the growth coin, the bottom 250 bottles went down in value by 46 per cent, the bottom 100 by 56 per cent and, if you’d bought the bottom 10 performing bottles in 2008, you’d now be staring at a crucifying 73 per cent loss.
In terms of what to buy in order to minimise the risk, stick to limited editions and single-cask releases from some of the iconic distilleries. Macallan, Dalmore, Glenfiddich and Balvenie have all performed admirably. Bottles from some of the closed (silent) distilleries are also heavily sought after and have shown large increases in value. Port Ellen and Brora are among the best performers.
On a more local level, I’m finding Clynelish values are increasing at a healthy rate. In fact, had you purchased a portfolio of bottles from Clynelish in 2008, the increase in value would be around 39 per cent overall. Some of the best-performing bottles include a number of the Rare Malts Selection bottles (discontinued in 2005) which have seen rises of in excess of 100 per cent. The 17-year-old Managers’ Dram bottle was selling for around £100 in 2008; it now sells for £220 to £250 at auction.
Whilst some collectable bottle values from Glenmorangie have seen a recent general decline in values, a bottle of its “Truffle Oak” release sold for £620 just last week. When you consider this bottle originally retailed for £65, that’s an incredible increase.
So whilst there’s a viable alternative investment in whisky, it’s clearly not for everyone. There are a great many whisky enthusiasts who, rightly so, buy their whisky with the sole aim of drinking it. That’s another great plus side to whisky as an investment – as bottles are continually being removed from the supply chain it makes the remaining bottles rarer, therefore further increasing values.
It’s well worth checking out that old bottle that’s been in the loft for 20 years as it might be a true piece of liquid gold. Above all else, as with any investment, always remember values can go down as well as up, but if the market ever crashes, nothing goes down (the throat!) as well as a fine Scotch!
The monthly dram
ONE of the hottest bottles of investment-grade Scotch to be released over recent years was the Highland Park Earl Magnus bottle (15 years old, 5976 bottles released).
It originally sold for a retail price of £85. At auction you’d expect to pay around £250 to £300 for a bottle. If you found one at a specialist retailer you’d expect to pay around £500.
Nose: At its cask strength of 52.6 per cent there’s some initial nose prickle. Get through that and there’s a real honeyed spiciness with ginger and clove oil. The fruitiness reminds me of caramelised strawberries (if there is such a thing!). The peat is definitely in there but adds depth rather than taking a prominent position.
Palate: There’s a slight tongue tingle with the strength of alcohol but nothing like you’d expect from this strength of spirit. Very smooth, there’s an initial sweetness and the spices carry through with wonderful oakey vanillas and a soft smokiness.
