This article highlights the best whisky cask investments, providing valuable insights for alternative investments in managing your personal finance.
Whisky casks have become an increasingly popular investment opportunity over the years.
With the rise in popularity of whisky and the limited supply of quality casks, investing in whisky casks can be a lucrative venture for those who know what they are doing.
In this article, we will discuss some tips on how to make the best whisky cask investments, some recommendations, as well as a look into whisky casks as alternative investments.
If you want to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).
Overall, there are superior alternative assets to invest in than whisky that we can introduce, which produce better cash flow.
What are alternative investments?
Alternative investments refer to assets that are not traditionally traded in the stock or bond markets. Some examples of alternative investments include fine art, collectibles, real estate, and even liquor.
This usually means any non-traditional investment treated as a financial asset that isn’t a stock, bond, or mutual fund.
Other examples of alternative investments are rare commodities, managed futures, private equity, venture capital, and antiques.
Investing in alternative assets like fine art and liquor can offer several advantages over traditional investments.
Alternative investments are held mostly by large financial institutions or authorized, high-net-worth individuals due to their high risk, lack of regulation, and complexity. It is always recommended to seek the counsel of a professional financial advisor before investing in these vehicles.
Many alternative investments have significant minimum investments and costs when compared to mutual funds and ETFs.
There is also less of a chance for marketing and public disclosure of verifiable performance figures for such investments.
Although alternative assets may have higher minimums and initial investment fees, they often have lower transaction costs than traditional assets because of their lower levels of turnover.
Alternative assets are often less liquid than their more conventional counterparts. Selling an 80-year-old bottle of wine is significantly more difficult for investors than selling 1,000 shares of Apple Inc., for instance.
Alternative investments and the deals that involve them might be difficult to evaluate also because of their rarity. There are only thirteen 1933 Saint-Gaudens Double Eagle $20 gold coins in existence, and only one of them can be held legally, therefore pricing them fairly may be challenging for a seller.
Because of the lack of regulation, alternative investments are susceptible to fraud even if they do not include precious items.
Additionally, alternative investments can provide diversification benefits by adding non-correlated assets to a portfolio, which can help to further reduce risk.
Fine art and liquor are particularly interesting alternative investment options because they have the potential to appreciate in value over time.
This is especially true for rare or highly sought-after pieces of art or bottles of liquor. For example, a rare bottle of whisky that was produced in limited quantities could appreciate significantly in value over time, especially if it is well-preserved.
Investing in fine art and liquor can also offer some unique benefits beyond financial gain. For example, owning a collection of fine art or rare liquor can be a source of personal enjoyment and pride.
Additionally, investing in these assets can provide opportunities for networking and socializing with other collectors and enthusiasts.
Overall, alternative investments like fine art and liquor can be a valuable addition to a diversified investment portfolio. However, it is important to do your research and work with a trusted advisor to ensure that you are making informed investment decisions.
Benefits of alternative investments
Due to their unique qualities and differences from more mainstream markets, alternative investments may have poor correlations to standard investments like stocks and bonds.
As a result, investors seek alternatives as a way to diversify their assets and reduce portfolio risk.
Due to the higher risk they entail, unconventional investments typically have a greater return potential than safer, more mainstream choices.
There is a vast range of alternative investments, so investors can find one that fits their specific situation, level of risk tolerance, and long-term goals. The potential for passive income makes some cryptocurrencies more attractive to investors than others, for example.
There are other investing options that are good options to provide protection from inflation. Such contracts include leases on properties with built-in rent increases and commodity contracts whose prices rise and decrease with market fluctuations.
Other investments are more likely to be affected, and increase or decrease in value depending on inflation rates.
Investing in niche or emerging markets may provide access to opportunities that are unavailable through more traditional means of capital accumulation. These are also considered forms of alternative investments.
While the returns of alternative investments may attract a fair bit of attention, the illiquidity of the market will make it more difficult for them to liquidate their investment. This could be seen as beneficial by investors who will be less likely to sell their stocks in a panic or make irrational decisions.
Drawbacks of alternative investments
In terms of expenses, investment fees and charges for alternatives are often greater than those for mainstream vehicles. They are similar to private equity and hedge funds for their high management and performance fees, which eat away at investor returns.
While many stock and bond trades are now commission-free, many alternative investing products are not.
Alternative investments are often illiquid, which might be seen as a positive.
But let’s say a banker is in a bind and wants to quickly sell some movie memorabilia to cover some outstanding debts. If there is not a healthy demand for the object, they might not be able to sell it quickly or readily without losing a lot of money or time.
If alternative assets are not commonly traded on public exchanges, market data on historical patterns or pricing may also be more difficult to obtain. This makes it harder to be informed about investments.
Since they are not subject to the same level of regulatory monitoring as publicly traded corporations, alternative investments may have a higher risk of fraud, misbehavior, and other abuses as well.
The rewards on alternative investments are higher than those on more conventional investments, but the risks are higher as well.
Similarly, alternative investments are notorious for their increased complexity. When dealing with investments that have complex structures and agreements, there is a greater risk of making bad financial decisions.
It may be tough to put a price on some things because there aren’t any reliable market prices for them.
How do you start investing in whisky?
You should know your whisky varieties as well as your whisky brands before investing in casks or even a rare bottle.
It is not uncommon for a single company to own multiple whisky labels, each of which makes its own unique blends and single grains.
The grain combination, the type of wood used in the cask, and the amount of time spent in the cask all contribute to the unique flavor of each superb whisky. Fine whisky’s flavor and quality are determined by these three factors, but the label also matters a great deal.
It is not enough for whisky to have appealing qualities; it must also be scarce and expensive. Whisky from well-known distilleries is of high quality, but buyers should also consider supply levels. That’s why vintages of Macallan Scotch whisky and Van Winkle Bourbon fetch such astronomical prices.
Due to their limited availability and high demand, investors favor purchasing vintage and limited edition whiskys.
Whisky casks are high-risk investments, therefore only those with a strong stomach for uncertainty should try buying one. Casks are more expensive than regular bottles of whisky, but they increase in value with time.
You need to know the distinction between a whisky investment and whisky speculation as well.
Older and rarer bottles, such as the Macallan 25 Year Old series, are the best bet for whisky investors. There are hundreds of historical sales results dating back decades because these bottles have been on the market for so long.
You can use this information to predict how well this bottle will continue to perform over time and how much money you can expect to make from it.
These bottles are likely to appreciate at a slower rate than newer releases like the ones we describe below, but they may be a safer investment because their value is less likely to plummet as quickly as that of a newer release’s cask.
Investing in old and rare bottles is risky, and there’s not much excitement to be had in the process. Due to the long-term nature of these assets, you shouldn’t expect any wild price swings.
Someone who buys new bottles as soon as they come out and then resells them is called a “flipper.”
For newer releases, there is no denying that current demand is exceeding supply of quality whisky nowadays, which has caused prices to soar following their first release.
Those who are successful in securing a bottle may reap substantial financial rewards. After an initial surge in demand, however, the price of bottles like the Macallan Genesis 2018 usually falls to a more reasonable level.
The best method to maximize your return on investment for any new whisky releases you purchase is to unload them as soon as possible after you get your hands on them.
Investing in bottles
Buying bottles of whisky and storing them until you’re ready to sell at a profit is one of the simplest methods to invest in whisky.
But there are certain things to think about if you want to buy whisky in a bottle, such as:
- How to tell a real bottle from a fake
- Where to discover the most sought-after collector brands
- Specifications of the available batches
- The price of the whisky you want to buy in relation to its current market worth and its potential growth
- Finding a secure location with ideal storage conditions is essential for keeping the bottles in good shape.
Investing in whisky casks
Whisky is a long-term investment that won’t pay off right away. It is possible to purchase whisky at wholesale costs and acquire complete cask ownership by purchasing it directly from some distilleries.
If you’re not sure which whisky bottles will sell well, a cask investment is a more cost-effective and practical solution.
Cask whisky investments are dangerous since the security of your investment barrels is in the hands of the distillery. Therefore, you must be certain that your whisky is in secure hands at all times.
Whisky barrels should be aged for at least three years before the liquid is bottled. Another option is to sell the barrels to a distillery, which will combine them with other casks to create a new product.
Review the Cask Investment Guidelines (issued by the Scotch Whisky Association) before engaging in cask commerce.
There are other factors to think about before purchasing a whisky cask, such as:
- The cost of the whisky and the barrel it will be stored in must be paid in advance. There is also a pricing disparity between the various barrel varieties. European oak, for instance, is both more difficult to come by and more costly than American oak.
- Whisky barrels can be stored at a distillery or with a third-party storage company, but you’ll have to pay for the privilege.
- Costs increase further when the whisky must be transferred to bottles and labeled.
- Additional taxes include Value Added Tax and Duties.
- After factoring in all the expenses, a collector may expect a return on investment of roughly 50% from a 4-year whisky cask.
Keep in mind, too, that the distinctive qualities of cask whisky are imparted by the barrel, so your return on investment will be proportional to the quality of both the whisky and the barrel.
Choose the Right Type of Cask
The type of cask you choose to invest in can greatly impact the value of your investment. Generally, the most sought-after casks are those made from American white oak or Spanish sherry oak.
These types of casks are known to impart unique flavors and aromas to the whisky, making them highly prized by distilleries.
Consider the Age of the Cask
The age of the cask can also have a significant impact on its value. Generally, the older the cask, the more valuable it is. However, it is important to note that there is a limit to how long a cask can be used before it loses its ability to impart flavor to the whisky. Most casks are used for around 10-15 years before they are retired.
Look for High-Quality Casks
Investing in high-quality casks is essential if you want to make a good return on your investment. Look for casks that have been well-maintained and stored in optimal conditions.
Casks that have been damaged or poorly maintained will not be as valuable as those that have been well taken care of.
Consider the Distillery
The distillery that the cask comes from can also impact its value. Casks from well-known and respected distilleries are generally more valuable than those from lesser-known distilleries.
This is because the whisky produced by these distilleries is highly sought-after by collectors and enthusiasts.
Invest for the Long-Term
It bears repeating that investing in whisky casks is not a short-term venture. It can take many years for the value of your investment to increase significantly.
Therefore, it is important to be patient and invest for the long-term. This means holding onto your casks for several years before selling them.
What are the best whisky cask investments in 2023?
Johnnie Walker Blue Label Ghost and Rare Port Ellen
Ghost and Rare Port Ellen is a limited release from the famous Johnnie Walker brand, a “ghost” whisky from a distillery that no longer exists.
Three ghost whiskies and five rare malts come together to create the distinctive and nuanced flavor of Johnnie Walker Blue Label Ghost and Rare Port Ellen.
The distillery in Port Ellen, from which this blend takes its name, closed in 1983. The legendary Islay single malt Scotch whiskey, a ghost whisky highly prized by connoisseurs, sits at the heart of Johnnie Walker Blue Label Ghost and Rare Port Ellen.
This blend is a superb blended Scotch whisky since it contains various rare and highly sought-after Scotch whiskies and is produced by a well-known company.
Uncle Nearest 11 Year 1820 Premium Single Barrel Tennessee Whiskey
Uncle Nearest is one of the most rapidly expanding American whiskey brands. Uncle Nearest is a Black-owned firm that operates three distilleries in the state of Tennessee.
One of the best whiskeys for investors is Uncle Nearest 1820 Premium Single Barrel 11-Year-Old Whiskey, which was named Best Tennessee Whiskey at the 2020 World Whiskies Awards.
The Uncle Nearest 1820 is one of the best premium whiskeys available at the moment, and it’s surprisingly cheap given that it’s made in a tiny batch.
As evidence of their commitment to quality over quantity, Uncle Nearest states that fewer than one percent of their Premium whiskey is bottled for the Single Barrel. Uncle Nearest is a promising investment because of the accuracy and care with which it is made.
Blood Oath Pact No. 8
Lux Row Distillers’ Blood Oath Pact No. 8 is the best Bourbon to buy for the long haul.
There are seven distinct blended bourbons in the Blood Oath series. There are overtones of apple and pear brandy in this widely anticipated Bourbon mix, which is comprised of three whiskeys aged 8, 11, and 14 years and finished in an ex-Calvados cask.
Although Blood Oath Bourbons are among the most reasonably priced premium whiskeys were first released, their resale value has since increased by as much as 100%.
Due of their low-key brand, Lux Row has done very little promotion leading up to a release. Traders should still keep a watch out for this rare bourbon that appeared on store shelves last year.
The Yamazaki 55-Year-Old Single Malt Whisky
This Japanese whisky is so uncommon and expensive because it has been aged for decades to develop its complex and distinctive flavor. The whisky is produced at the Yamazaki Distillery using hand-picked malt and aged in charred oak barrels.
The International Spirits Competition awarded this whisky first place, and Jim Murray included it in his renowned Whisky Bible.
Whisky has a rich amber color and smells of fruit and spices. The whisky has a rich, deep flavor that includes notes of wood, smoke, and dried fruit. The aftertaste is mildly spicy and lingering.
Only a few thousand bottles of the Yamazaki 55-Year-Old are released each year, making it a highly collectible item.
Over $930,000 is the average price for a 750ml bottle, making it one of the most expensive whiskies in Japan. Even though it’s expensive, this whisky’s popularity has been on the rise over the past few years.
Midleton Very Rare Vintage Blended Irish Whiskey
Midleton released its yearly Very Rare Irish Whiskey. Midleton’s expert distillers use only their rarest single malt and single pot whiskeys to create this vintage mix.
The whiskeys, which range in age from 12 to 33 years, are then combined and aged in an ex-Bourbon cask made of American oak, which has been lightly charred.
Because of Midleton’s meticulous distillation process, the flavors and fragrances in this vintage blend are like a trip through time. The price of Midleton’s 2017 Very Rare Vintage Blended Irish Whiskey has more than doubled since February 2021, despite the fact that Midleton is a lesser-known brand.
This and future rare whiskey productions by Midleton may continue the trend, while investors can’t be sure of the same for Irish whiskey.
Hibiki Blend 21 Year
Whisky collectors with an affinity for the unusual should head to Japan in search of the best value. Smooth and tropical in flavor, the Hibiki blend of malt whiskey is becoming increasingly hard to find.
One of Suntory’s best-known whiskies is the Hibiki Blend. The fruity and spicy flavors that define Hibiki are a hallmark of this malt and grain whisky.
Several variations of the 21-year-old Hibiki Blend have earned gold medals at the World Whiskies Awards, while the original Hibiki Blend won Best Blended Whisky four times out of seven.
Since 2020, bottles of the Hibiki Blend have continuously valued by up to 30% every year, and this trend shows no indications of slowing.
Colonel E.H. Taylor Barrel Proof Rye
The Barrel Proof of Colonel E.H. Taylor, Jr. Rye whiskey is unlike the others on this list. It’s the only whiskey of any kind that is both rye and barrel-proof.
Barrel-proof whiskey, unlike most other whiskeys, is not watered down after aging, resulting in a higher alcohol content per bottle. This 2022 release is so rare and sought-after that finding it for less than $700 a bottle is nearly impossible.
E.H. Taylor’s Straight Rye Whiskey has tripled in value over the past two years, and this new edition is a barrel-proof version.
The price of other types, such as Barrel Proof Uncut & Unfiltered Kentucky Straight Bourbon, has followed a similar pattern throughout the same time frame. No one knows if this is a limited run of the whiskey, so smart investors will want to get their hands on it as soon as possible.
The Macallan Anniversary Malt
When it comes to the price and quality of Scotch whisky, The Macallan has one of the best reputations in the industry. The Macallan is still a premium Scotch distillery, although the days of their rarest releases are long gone.
Depending on the year of bottling, the Anniversary Malt, a limited-edition single-malt Scotch whisky, can fetch upwards of $6,000 at auction.
The oldest 1957 release of this limited edition single malt Scotch will set you back $13,000 or more, although the price has leveled off or even fallen for subsequent releases.
There has never been a better time for new investors to enter the Macallan market, as vintage Macallan whisky bottles are among the most sought-after whiskeys in the world.
GlenDronach Highland Single Malt
Scotch enthusiasts who are trying to get more for their money could find that rare whisky from GlenDronach, a distillery in Speyside. Although it is Scotland’s second-oldest distillery, GlenDronach was not well-known until the middle of the 20th century, when it began to focus on ex-Sherry maturation.
Since Brown-Foreman bought the distillery in 2016, it has been responsible for creating some of the most expensive Scotch whiskey ever.
The 50-Year-Old Highland Single Malt Scotch from GlenDronach is the brand’s oldest expression. With a suggested retail price of $25,000, this handcrafted Scotch has the potential to be the most expensive whisky in the world.
Sotheby’s has made a whopping £40,000 off the sale of one of the 198 bottles (which came with a tour of the GlenDronach distillery). If the GlenDronach 50-Year-Old Highland Single Malt is well regarded by critics, it could be a great investment.
Are whisky casks good as alternative investments?
Aged for at least three years in wood casks in Scotland, Scotch whisky is a specific type of whisky. There are around 22 million barrels aging in storage in Scotland. Unlike whiskies from other countries, Scotch does not use the letter ‘e’ in its name.
First and foremost, the whisky industry is small and should never account for more than a small fraction of your investment portfolio.
One should have a diversified portfolio including cash, bonds, and equities before considering an investment in whisky.
However, whisky casks are a good alternative investment option for those looking to the business. Scotch whisky has been produced and consumed for centuries, and its industry has always been at the cutting edge of cultural trends.
As more and more people learn to appreciate the unique flavor of whisky aged in wooden casks, the value of your investment is only expected to rise.
Scotch Whisky exports to the rest of the world hit a record high of over £6 billion in 2022, according to the Scotch Whisky Association (SWA).
Scotch whisky exports in 2022 were valued a record £6.2bn, up 37% from the previous year. Meanwhile, the number of 70-milliliter bottles exported jumped by 21 percent to 1.67 billion.
These bottles are not only delicious, but they are also rather valuable: depending on their age and rarity, some single malts can sell for hundreds, if not millions, of dollars. Particularly valuable are whisky casks from Scotland’s oldest distilleries.
In December 2018, at The Distillers One of One charity event, a four-decanter lot of Glenfiddich single malt from the 1950s sold for £830,000, setting a new record for the highest price ever paid for Glenfiddich at auction.
The recent record for whisky at auction was set by an Asian collector who spent £16 million on a “one of a kind” 1975 cask of Ardbeg single malt Scotch.
A cask’s value is established by the whisky’s quality. A cask’s worth increases with age and scarcity.
As a result of reduced exposed surface area to evaporation and light, smaller barrels are more valuable than larger ones.
Given the current economic climate and the skyrocketing inflation rates, it is only natural for investors to seek refuge in hard assets, which they perceive to be less susceptible to market fluctuations and other shocks.
In times of economic instability, gold has traditionally been considered a “safe haven” investment. But can we have faith in the long-term viability of booze as a medium of exchange? Is it possible to put money into whisky with peace of mind?
While the figures are compelling, they are not a guarantee of investing success in any one field.
Prospective investors should undertake the same procedures they would for any new investment before allocating funds to an unproven asset class. Potential investors should think about these things:
- Keep your long-term financial goals in mind at all times.
- Remember that the market can (and will) go up as well as down.
- How much money could I make investing in whisky?
- How much cash do I have at my disposal for making non-traditional investments?
- Can I afford to lose every I put into this investment?
- In the event of a financial emergency, how safe am I?
In conclusion, investing in whisky casks can be a lucrative venture for those who know what they are doing.
By choosing the right type of cask, considering the age and quality of the cask, looking for casks from well-known distilleries, and investing for the long-term, you can make the best investments into whisky casks.
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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.
