From Special Report: Investing in Whisky and Champagne - December 2011
Whisky: A palatable alternative investment market
When people talk about the alternative investment market, whisky isn’t the first thing that comes to mind.
Precious metals, art, antiques, wine and even toys are more familiar as viable investments.
In the last 20 years, full sealed bottles of rare whisky have been increasingly sought after by collectors and investors. Like any investment, to make worthwhile gains you have to understand the market inside out; get it right and the returns can be impressive.
If you’d bought the current best performing 250 bottles of whisky in 2008 (at auction in the UK) they would have cost £42,508. In todays’ market they would be worth £94,884, an increase of 123.21 per cent.
If you’d done the same with the top 100 bottles, the increase is 162.96 per cent and the top 10 would have gained by 297.62 per cent, according to the Whisky Hignland index.
As with all investments, the risk of getting it wrong can be catastrophic, and whisky is no exception. The bottom 10 performing bottles of whisky represent a 73.47 per cent loss in value since 2008.
So how do you get it right? Firstly you have to get the right ‘type’ of whisky. Single malt scotch whisky has experienced the best gains in value and is far more sought after than blends or foreign whisk(e)y.
There is a market for very old blended whisky, with bottles from the early 1900s selling for low to mid hundreds of pounds. If you compared that with a bottle of single malt from the same period you’d be into the thousands of pounds for virtually every bottle.
Bottles from certain distilleries are far more sought after than others. Stick to the iconic collectors distilleries including Macallan, Dalmore, Ardbeg, lagavulin, Glenfiddich and Highland Park. Apart from producing spirit of incredible quality, these distilleries actively cater for the collectors and investors market. That’s not to say that other distilleries don’t produce investment grade scotch, however, this is all about minimising risk. Standard releases don’t represent an investment, stick to limited editions, special releases, single casks and commemorative bottles.
Bottles need not cost the earth; good examples of successful Investment Grade Scotch (IGS) released in 2011 are – The Macallan Royal Marriage which cost £150 and now sells for around £500, Ardbeg Feis Ile 2011 which cost £90 and now sells for upwards of £300 and Glenfiddichs’ Benevolent Foundation Reserve which cost a mere £50 and now sells for between £250 and £300.
At the other end of the price scale, The Dalmore broke its own record of £120,000 for the most expensive bottle of whisky ever retailed with its 62-year old ‘Drew Sinclair’ bottle. This is one of twelve individually named bottles originally released in 2002. One of these bottles sold at auction in 2002 for £22,000 (hammer price), another bottle sold in 2005 for £32,000 (bought and drunk in a London hotel), with the most recent bottle selling for £125,000 earlier this year. That represents a 468 per cent increase on the 2002 price.