Whisky holds many secrets, one of which is investing, where a small outlay can reap big rewards
Whisky’s worldwide status has increased over the past decade, with it emerging as a credible alternative to more traditional forms of investment, such as stocks and shares or even gold, so why not learn about whisky?
The size of the market was estimated at £7.66 million in 2014, up 69.4% on 2013, and it is expected to continue rising in future years. So, if you are looking to invest some hard-earned cash in whisky, the same basic rules of investment apply – mainly, do not invest what you cannot afford to lose and, although short term gains are possible, whisky should still be viewed as a long-term venture.
For those with tens of thousands of pounds to invest, companies such as Rare Whisky 101 will happily advise on the best malts to buy. However, the beauty of investing in whisky is that it is not just for millionaires – enthusiastic amateurs can also earn a significant return with a relatively modest outlay.
With this in mind, I shall share some of my tips for investing, recommending three bottlings that not only have a good chance of making a return, but will also taste great if their returns potential happens to nosedive!
The first thing to bear in mind is the brand you are buying. Although you might be a fan of Edradour or Tobermory, neither of these brands are likely to give you the sort of return more recognisable names, such as Johnnie Walker, Glenfiddich or Highland Park, will.
Big brands have a strong following, making the market for them much bigger, especially for the casual investor who simply wants to buy a special bottling of their favourite whisky. Collectors in emerging markets where knowledge of whisky is still in its infancy, such as Russia, India, China and Brazil, will also stick to the brands they are most familiar with when buying a bottle, making it easier to sell your bottle if, and when, the time comes to selling up. Also, more of these whiskies are consumed due to their perceived higher quality, which leads to fewer bottles existing and a consequent growth in value.
Alongside the big brands mentioned above, the output of some smaller distilleries, such as Islay’s Ardbeg and Laphroig, will prove popular too, as their fans will stop at nothing to complete their collection. And do not forget the new boys from right across the globe, including Australia, Japan and Taiwan.
Unsurprisingly, limited edition bottlings also tend to attract the interest of investors. This follows the simple rule of supply and demand, whereby demand of the product is high but availability is restricted, meaning investors who missed out first time round will pay a premium for the product.
Bottlings can be produced for a variety of reasons, including birthdays and anniversaries, national events, experimental releases or simply just stray casks which were found in the warehouse (although this is becoming less common).
In addition, a number of these bottlings are only released in the UK, or even more exclusively at the distillery itself,which can then open up a worldwide whisky collecting audience to the seller.
In 2013, The Macallan released a bottling to mark 60 years since the coronation of Queen Elizabeth II. The release was limited to only 1953 bottles (the coronation year), and was available exclusively to UK customers. As a result, the malt is already trading hands online for almost three times its original price, with many bottles ending up in the hands of international investors. All of these bottles are gone now though, so instead, I will recommend a bottling which was only released at the end of May: Ardbeg Perpetuum.
Whiskies from closed and silent distilleries also provide great potential for investment. With production of these brands having ceased, either due to the distilleries being mothballed or completely demolished, their remaining stocks remain very highly sought after. The list of closed distilleries is long, and includes names such as Rosebank, Port Ellen, Hazelbank and Pittyvaich, to name but a few.
Although some of these distilleries can spring back into life – Tamdhu in Speyside is a prime example of this – their content can still prove an attractive and unusual buy for whisky collectors and investors. In recent years, distillers have become increasingly aware of the investment potential in these whiskies, which has resulted in their initial retail values starting to creep up: the first bottle of Port Ellen I sold to a customer when I worked at the Oban Distillery was valued at £300, but 2014’s release came in at a whopping £2,200!
As mentioned at the outset, these whiskies do not have to cost the earth, with Diageo’s annual release of special editions always throwing up some interesting bottlings. Remaining true to form, last year’s line-up included a bottle of Rosebank for just £300!
So, now you are well placed to start your own whisky investment fund. Just do not lose sight of whisky as a liquid to be enjoyed if you immerse yourself in this fast moving and exciting market.
Highland Park Odin
I would recommend picking up a bottle of Highland Park’s Odin. Released as part of the distillery’s Valhalla Collection, Odin is the final expression in a range that has gained a cult following, due to its unique bottle design and distinctive marketing – and some fans will stop at nothing to complete a collection!
With an RRP of £180, there is a good chance of making a return, while the whisky inside is rich and dark with the distillery’s trademark sweet and peaty character.
Highland Park distillery
Highland Park distillery is a Scotch whisky distillery based in Kirkwall, Orkney and is the most northerly whisky distillery in Scotland Highland Park has been named The Best Spirit In The World three times and has also received the World’s Best Single Malt award, and the Ultimate Spirit Award in 2013 Highland Park is harmonised for up to six months in order to ensure the whisky, drawn together from a variety of cask types, is perfectly married and consistent in flavour before bottling.
This new whisky was created this year to mark 200 years since Ardbeg was first distilled on Islay, and fifteen years since the distillery’s future was safeguarded by the foundation of the Ardbeg Committee. The Perpetuum brings together a whole host of di erent whiskies, from the very young to the very old, using both bourbon barrels and spicy sherry casks. This might sound like a bit of a mish-mash, but the genius that is Dr Bill Lunsden has created a truly stunning dram, mixing the traditional smokey and maritime flavours with a delicious, creamy finish.
The Ardbeg distillery was founded in 1815 and has a max production capacity of 1,250,000 litres. Sited on the south coast of the isle of Islay, Ardbeg is famed for the heavily peated flavour of its whiskies. Ardbeg whisky is considered to be among the peatiest in the world, with most expressions using malt with a phenol content of 55ppm.
Its name is derived from the Scottish Gaelic: Àrd Beag, meaning small headland.
Generally considered the best of the closed Lowland single malt distilleries, Rosebank operated on the banks of the Forth-Clyde. The distillery produced its final spirit in 1993, with Glenkinchie chosen to represent the Lowlands in the then new Classic Malts range. The whisky is considered a lost classic of the industry, with last year’s 21-year-old release one of the best examples of a light, fruity and fragrant Lowland whisky. Although all of this extremely rare release is now sold out, hopefully Diageo can find enough drops for one final release this year.
The Rosebank distillery was situated in Camelon on the banks of the Forth and Clyde canal which runs between Edinburgh and Glasgow. Its name originated from the roses which grew along the side of the canal Rosebank was once considered one of the premier lowland whiskies but United Distillers mothballed the distillery in 1993 due to excessive upgrade costs The closure of the distillery was considered a grievous loss by many whisky aficionados.