Whisky is luxury in a sip, sip in luxury. Imagine the luxury of sipping a divine dram from 1980, a rare & vintage 40 YO whisky or a rich complex 50 YO or an elegant sherry finish…. each carrying history and tradition of, at times, over a 100 years. Sipping luxury… luxury crafted in the wild valleys of Scotland or the elegant countryside of Ireland or the lively bars of Osaka.
But then is whisky just for drinking & appreciating or …..can we collect it as well. Most of us have been drinking and partaking of this pleasure since decades and over generations. Though over the last few years, Whisky has acquired the status of an investment. Whisky is one of the finest expressions of luxury, a luxury which is being collected and even being considered a worthy investment.
Welcome to the world of Uber luxe, in the world of Whisky, as whisky reaches its highest pinnacle as an Investement, aptly making it – The Golden Dram.
Over the last few years, Whisky has acquired the status of an Investment grade product. Connossiuers and Collectors, are collecting premium and rare whiskies, as part of their private collection. One of the biggest advantages of Whisky is that it is a non-perishable product, as such there is no chance of the liquid inside the bottle getting spoilt. Whisky has a long shelf life and stays good for a long long time.
Investment grade whiskies, have shown a strong growth over the years. Investors have shown a preference for rare & vintage whiskies, strong brands and limited editions. Between Jan 2011 and Dec 2013, the top 1000 Single Malt whiskies, have appreciated by almost 130%. In the same period, the top 250% have grown by 200% and the Top 100 Single Malts have appreciated by 230%. That’s more appreciation in value than most other products or even commodities.
Interestingly enough, Whisky has appreciated more than Rare Stamps, Gold & even Rare Stamps, over the last few years.
Whisky funds are also investing in “Silent Stills”, whisky distilleries which have closed down, since most of these distileries have old stocks or the holding stocks of the distillery. Keeping in view that these will not be produced ever again, the value of these stocks goes up substantially and are classified as rare whiskies. Investments are also made in limited releases of some iconic brands. These are released a few times a year and snapped up by avid collectors. Appreciation starts immediately, since the product is out of the market and not available. Limited Edition whiskies are also prime products for collection. Limited release of a few hundred bottles, are released by brands & offered to dedicted communities of loyalists.
Investments are also made in high performing iconic brands from Japan, USA, Ireland and Scotland. Over time, appreciation in the price of Japanes whiskies has been high, though investments, are still more in Scotch whisky. Old stocks of whisky, lying with collectors are also valuable. There are collectors in UK, Asia & Europe, who were initially enthusiasts and collected whisky as a hobby. Over the years, the value started appreciating and this became an investment.
Interestingly, stocks with independent bottlers, who had amassed stocks of premium brands, have also witnessed a great upsurge, in the last few years. These bottlers lacked identity for a long time and were diligent owners, who had collected some great stocks. Initially these were being bottled under their own brand name and possibly, did not command a high premium. Though, of late, realization has dawned that they were sitting on serious stocks, which are precious & of high value.
It is normally observed that aged whiskies command higher premium. Whiskies higher than 25 YO have witnessed high appreciation as these are, in any case, distilled in limited quantities. The demand for whisky has been unprecedented, in the last few years, which has led to a sharp increase in price. Besides, one cannot hury up the process, it has to age for as much time.
Value appreciation of premium whiskies is primarily due to rarity of stocks and premium positioning of brands. The last decade has witnessed a huge spurt in demand for whisky across the world more so in growing economies like China, Taiwan and India.
In 1980s and 90s, Distillers were also laying limited stocks, not anticipating the latent demand from the new economies. The demand in Asia has surprised all past estimates. Most of the sales have been in Asia, since the Asian economies have seen great growth, creating many super-rich. Annual sales of single malt Scotch whisky increased by 190% from US$390 million to US$1.1 billion. Whisky production in 1980s did not scale up enough to meet the current demand for aged single malt whiskies globally (particularly in Asia).
The new millennium millionaires also have a high disposable income and feel the need to express themselves through “objects of desire”. Besides Watches, Diamonds and Real Estate, Whisky is seen as a “rich” buy. The Rich in Taiwan & China, besides South Africa & USA, are on the look out for sought after bottles. These old collectors bottles are, both enjoyed & collected. This increases the price & value.
Whisky bottles are passed down the generation, as an inheritance. These bottles are picked up at auctions & private previews and secured over the years as apt Heirlooms.
Another key factor has been the marketing of key brands. Brands including The Macallan, The Balvenie, etc. have seen a high investment in brand building, which has made its premium stocks even more precious. Packaging is also a major attraction among collectors and connoisseurs. Resellers and Portfolio Managers add value to select older stocks, by re-packaging them in new bottles or decanters.
Some of the finest distilleries, that lead the investment grade and potential are The Macallan, The Balvenie and The Dalmore. Some investment grade whiskies, are even from 1960s and 1970s. Springbank, Bowmore, select expressions of Ardbeg & Glenmorangie, Islay`s magnificient monsters like Lagavulin and Coal ILA besides, Highland Park are amongst the most sought after whiskies.
Potential collectors can start private collections and consider building a Portfolio, over at least 2-3 years. Keeping in view the current trends, its best to consider starting, even if it’s with a small initial investment.
Industry exposure & Experience, besides investment expertise is key in starting a Whisky Collection. One needs to study industry evolution, limited releases, distillery capacity and brand equity, as these are key to managing a good portfolio. The change in production, global outreach of brands, rise in disposable income, social-economic trends are also some key factors.
Cask costs, availability and trends, selection of the correct year and limited bottles are also quiet determinants, in whisky investment.
Experience in trading stocks, optimizing the portfolio by selling at the right time and estimating market value of stocks are essential.
In the initial stages of planning a portfolio, it might be best to appoint an Investment Expert, who guides the portfolio, plans investments and optimizes returns. These Investment Experts have direct access to auction houses and whisky buyers such as affluent connoisseurs, collectors, distilleries and collectors, through pre-defined channels.
Whisky is the new language of investment. Over the next few years, higher customer exposure, lower supply of premium malts, rising prices and above all love for the amber nectar will make Whisky Investment as the new trend.