William Fielding

Member Article

How whiskey investment is becoming the go to alternative for investors moving away from stock and shares

The Coronavirus outbreak and subsequent crash of global stock markets has led to many investors and shareholders suffering significant repercussions with investment values plummeting.

This economic downturn is leading investors to look elsewhere to secure their wealth, particularly through alternative and asset backed investments. These are becoming increasingly attractive to investors due to market fluctuations, such as those currently being felt for investors the world over.

At wholesale cask whiskey company, Whiskey & Wealth Club, we have seen an increased appetite from private investors and funds. Cask whiskey gives investors the opportunity to own a commodity and asset as they look to hedge against inflation and the uncertainties of the financial markets. In March alone investors put £1.1m into cask whiskey through Whiskey & Wealth Club, with just over 370 casks sold. This made March one of our most successful months to date. In April we broke this new record, with over 87,500 litres in the equivalent of 438 casks with a value in excess of €1.3 million. 

Why investors are hedging their bets on whiskey

The value of whiskey as an investment has risen significantly over the last decade. In fact, whiskey has fast become one of the most popular alternative investment opportunities, with rare whiskey topping the Knight Frank Luxury Investment Index. According to the 2020 index, the value of whiskey has risen by 564% in the last 10 years alone. By comparison, classic cars rose in value by 194%, fine art by 141%, and wine by 120%. Unlike rare whiskey, the value of cask whiskey is tied to its age rather than the markets, making it appealing to investors in the current climate, with value increasing with age.

The demand and secondary markets for both  Scotch and Irish whiskey have been growing year on year. For Irish whiskey as an example, the size of the market has grown by an average of 13% for the last two decades. Forecasts from the IWSR, the global benchmark for alcohol data, shows that the growth of both Irish whiskey and Scotch is set to continue. Yet only 16% of whiskey brands own their own distilleries, meaning they require stocks of mature whiskey to bottle to meet consumer requirements, so the demand for aged casks is always there. 

As a result of the increased interest, distilleries across the board have informed us about planned price increases of up to 20% in the coming months. As the markets continue to fluctuate now is the time to invest in cask whiskey.

How can someone invest in whiskey? 

Casks containing approximately 200 litres of whiskey can be purchased straight from wholesalers, such as Whiskey & Wealth Club at more than half the retail rate. Allowing investors to become the full, beneficial owner. 

Unlike buying rare bottles of whiskey or selecting art in the hope they go up in price. This is highly speculative and requires an in-depth knowledge of  the asset. Whiskey in casks however, will always offer year-on year-returns and increases in value as it matures. 

 Annual returns are being achieved above 8% and as high as 54.5% a year, depending on an investor’s chosen exit strategy and time frame they buy and hold for. The longer they hold, the more rare and valuable the casks become. It is no wonder that investors are turning their heads with annual returns of 10% being achieved over five years and 20% after 10 years.

This was posted in Bdaily's Members' News section by William Fielding .

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