Whiskey & Wealth club cask whiskey wall
William Fielding

Member Article

Whiskey & Wealth club reports whiskey investment goes from strength to strength amidst Covid-19

The effects of the coronavirus pandemic have been far-reaching. To date, the crisis has thrown up several difficulties for a number of businesses across multiple sectors around the world. In the UK alone, the economy has shrunk by a record of 20.4%.

However, one thing has gone from strength to strength — cask whisk(e)y investment. Despite the turmoil with global economic markets, cask whisk(e)y investment continues to buck the trend and becomes increasingly favoured by investors, in spite of the current state of global financial markets.

A hit with investors

Since the start of the year, investors from around the world have looked to alternative investments. In particular, cask whisk(e)y to secure their wealth, with lockdown underlining this further. In the first half of 2020, investors have invested €7.8m in premium cask whiskey through Whiskey & Wealth Club. This figure is almost double than that of the same time last year. Whilst since lockdown, a total of 1,551 casks (258.5 pallets) have been purchased.

The fact premium cask whisk(e)y investment is asset-backed and not tied to financial markets is making it ever-more appealing to investors. Notwithstanding the fact that its value is largely determined by age, with expected returns of around 10% – 30% per annum depending on how long the casks are held for and a growing secondary market for premium mature whisk(e)y. We are seeing a real appetite for premium cask whisk(e)y amongst investors the world over. In the USA, the recent fluctuations in the stock market have been a big driver for investors to look to alternatives. We’ve also seen an uplift in interest from investors in Singapore and in Europe, specifically Germany, Denmark, the Netherlands and Finland.

Giving back to the makers

The beauty of these investments in premium cask whisk(e)y, is they go beyond just helping to secure wealth and deliver favourable returns for investors within the next five to ten years. They are also providing distillers with a welcome injection of capital which, helps them cover overheads in what is a capital and time-intensive whisk(e)y-making process. This is particularly the case with premium Single Malt and Single Pot Still casks, which are superior in quality and value as opposed to cheaper blends and therefore require greater impetus during the whisk(e)y-making process.

Due to the ageing process, it can be several years before distilleries can see returns. As a result, distillers will exclusively offer a selection of casks to reputable brokers at wholesale rates. In turn, this secures a cash injection to cover overheads and gives investors the chance to own their own casks which they can mature, sell or bottle themselves.

The growing appetite for whisk(e)y

The popularity of whisk(e)y investment has soared in recent years. This year, rare whisky topped the Knight Frank luxury investments index, rising by 564% in value over the last decade.

Currently, the Scottish whisky secondary wholesale market is estimated at $40m according to the IWSR, the global benchmark for wine and spirit data. Last year alone, exports grew to a record £4.9bn. Irish whiskey is also amid a resurgence. Exports have grown by 300% in the past decade, with the US market worth $1bn alone.

The road ahead

The growing global demand for premium whisk(e)y as well as the growing secondary market means that in a few years’ time, the demand for the premium mature spirit will rise, which is set to play into the hands of those holding mature premium stock. With uncertainty still surrounding the financial markets, at Whiskey Wealth Club, we anticipate investment in premium cask whisk(e)y to continue on its current trajectory, with global demand from investors on the rise.

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

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