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Special Report

Investing in Whiskey and Champagne - December 2011

Published by Investment Adviser | Jan 05, 2012

It’s no surprise really, considering that in 2009 exports of scotch whisky topped one billion bottles for the first time in the industry’s history

Whisky

Sales to Asia rose 17 per cent to 181m bottles, worth more than £480m. Sales to the more established markets of South Korea and Japan increased 26.5 per cent and 32.9 per cent respectively. The market in China is still in its infancy but clearly offers huge potential. India is another growth market, with 75m nine-litre cases consumed in 2009.

This increased consumption of whisky is leading to a heightened interest in rare limited editions. On page 41, Andy Simpson, founder of Whisky Highland, says that 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.

Furthermore, an exceptionally rare bottle of The Glenlivet, distilled in 1883 and bottled in 1931 by George and John Gordon Smith, was sold for £18,750 by Bonhams at their whisky sale in Edinburgh on October 12 2011.

According to Bonhams, the bottle, which was originally owned by Captain William Smith Grant, the great-grandson of Colonel George Smith, founder of The Glenlivet Distillery, had an impeccable pedigree, having been in the family ever since.

Champagne

Sales of fine champagne have also increased, with more than 300m bottles currently sold per year. In a year when the FTSE has had one of its worst runs in nine years - the FTSE 100 is down 13.7 for the year to October 31 - the Liv-ex Champagne 25 index, which tracks the price movement of 25 of the world’s most sought-after vintages, is only down 0.5 per cent, reports Rebecca Clancy on page 42.

Similar to whisky, copious sales are emerging from developing markets.

One Asian buyer recently purchased a bottle of the world’s oldest champagne, which was found in a shipwreck in the Baltic Sea, for a record-setting €30,000 (£26,700).

The bottle of Veuve Clicquot, nearly 200 years old, was part of the booty from the shipwreck dating to between 1825 and 1830 discovered in July 2010 on the sea floor near Finland’s autonomous Åland archipelago.

This shows that buying at the right time and being prepared to wait - not necessarily for 200 years though - could deliver a very good investment return.

The top grades of champagne include Bollinger, Veuve Clicquot, Krug, Lanson, Laurent Perrier, Mercier, Moët & Chandon and Mumm, while the more lucrative vintages of whisky are currently Glen Mhor, Glenury Royal and Glenesk, according to The World Whisky Index.

With an increasing demand and a finite supply, it is an enticing time to invest in whisky or champagne.

However, investors should bear in mind it is a professional market that needs professional advice, because it is all too easy to pay too much.

Simona Stankovska is features writer at Investment Adviser

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