06 Nov The global drive behind Scotch whisky
Since Whiskey & Wealth Club spotted the opportunity to bridge the gap between private investors and distilleries, we have been driven to understand the motivation that propels investors to purchase and hold cask whisky for financial gain.
Cask whisky investment has been around for centuries, but only to a select few. Allowing private individuals to buy and hold casks for financial gain is a novel concept — disrupting centuries of tradition in the Scottish industry and driving the growth of distilleries to meet market demand.
Our Scottish partners
Home to 128 active distilleries and many more whisky brands, Scotland has the highest concentration of whisky production of any country. The whisky maturation process, however, is a costly one for distilleries.
Not only does it come with operating costs, including the purchase of barley and further costs to malt it, there is of course the overheads when making the whisky. Recognising the electricity costs and expenditure on millions of litres of water, barrels, storage, staff, disposing of grey water and spelt barley after production, we knew this was a market Whiskey & Wealth Club could help support.
Over the past year, Whiskey & Wealth Club has built trusted relationships with some of Scotland’s most well established and highly reputable distilleries. These relationships, along with our team’s expertise and commitment to buying in large volumes are what set us apart from other whisky investment firms.
Having worked with the historic Bladnoch Distillery for example, this presents investors with the opportunity to diversify their portfolios, investing in a highly sought-after prospect. Distilled under the watchful eye of master distiller, Dr Nick Savage, investors can purchase casks of new spirit in the classic Lowland style.
Beyond this, Whiskey & Wealth Club are pleased to be in a position where we can now provide investors with exclusive releases throughout the year. Most recently, this included a limited run of Staoisha from Bunnahabhain distillery. An exciting prospect for Whiskey & Wealth Club investors, who can hold onto valuable commodities such as this, as they age and grow in value.
Scottish quality takes the high road
In Scotland, demand for the highest quality whiskies is surging. Scottish whisky is the world’s most internationally traded spirit, with 42 bottles shipped every second, according to the Scotch Whisky Association. The market currently makes up around 75% of Scotland’s food and drinks export revenue.
Last year, the Scottish industry posted another record-breaking year of sales. The global market growing to over £4.9 billion. For 2020, the trend is set to continue. With traditional markets such as the US resilient in the face of tariffs, countries including Brazil, India and South Africa are all showing signs of fast growth.
Specifically, premium Scottish Single Malts have become far more than a niche segment. Export sales grew by over 14% in 2016 to 2017; and exports of Scottish Single Malts are set to grow by 11.4% from 2018 to 2022. Overall, the market is set to enjoy a compound annual growth rate (CAGR) of 2.7% — while the CAGR of blends is set to fall over the same period.
The significant impact of investor age
Despite Scotch whisky sitting in a dynamic and competitive global spirits market, it continues to attract consumers who wish to tap into the global trend for premium spirits. Age, however, has a significant impact on perceptions of cask whiskey buying.
In Whiskey & Wealth Club’s latest 2020 Cask Whiskey Buyer Report the youngest group of investors surveyed aged 18-24, were driven to invest in areas that they enjoy. Cars, wine and art scored highly for these investors, while whisky (perceived as a more mature drinking choice) sees lower scores for Scotch 14% and 21% for Irish whiskey.
The picture, however, changes dramatically as potential buyers enter the 25-34 age range. The propensity to buy cask whisky effectively quadruples for Scotch (56% v 14%). A global superstar, putting all other forms of whiskey in the shade, the secret to Scotland’s success is its adaptability and market leadership, trending premium whiskies for the more mature investor.