16 Dec The rise of rare whiskey
Alternative investments have increased in popularity this year to wade against the volatility of a consistently uncertain market. When thinking of alternative investments, the first that may come to mind are likely antiques, wines, art and rare coins. However, the Whiskey & Wealth Club 2020 Cask Whiskey Buyers Report revealed there is a disconnect between perceived high value alternatives and reality, with rare whiskey outperforming all other categories over the past decade.
The 2020 alternative investment market
In uncertain times, whiskey has proven itself to be a savvy investment. The 2020 Knight Frank Wealth Report finds that rare whiskey has risen in value consistently and significantly over the past decade, up by 564% to leave more familiar alternative options such as automobiles (+194%) trailing in its wake.
Further research from the 2019 Knight Frank Luxury Investment Index identifies rare whiskeys as the best performing collectable. In the last year, rare whiskeys grew in value by 40% — easily out-performing investment options such as coins (12%), and art and wine (9%).
Buying rare bottles of whiskey or selecting art as an investment is highly speculative and requires an in-depth knowledge of the asset. Whiskey in casks, however, will always offer year-on–year-returns and increases in value as it matures provided it meets several criteria – age, quality, brand and rarity. These fundamental components define the value and likely returns of cask whiskey.
Cask rarity in 2020
The wholesale purchase and holding of cask whiskey for financial gain is a relatively new phenomenon and a part of an ever-developing market. This year whiskey production took a massive hit due to the coronavirus pandemic forcing many distilleries to close. According to the Scotch Whisky Association at the peak of the crisis, 87 % of whisky distilleries were either operating at reduced capacity or had completely closed.
These circumstances have led to significantly reduced production and therefore rarity, in turn creating increased value of all whisky created in 2020. A fall in supply and excess demand means the alcohol that was produced this year will be rare in the years to come.
An investment for the future
While 2020 presented the world with many challenges, it has been an incredible time for whiskey. We have never been in a situation where whiskey production all but completely seized. The whiskey produced in this incredibly turbulent year will be highly valuable in the next 15 years because of its rarity. Investors and whiskey enthusiasts would be wise to invest in 2020 whiskey as you’ll be buying a significant part of whiskey history.
The brand and age of the whiskey also play an integral part. Therefore, when buying a bottle or cask of 2020 whiskey, it is important to ensure you are buying from a well-established whiskey brand. The longer you sit on that bottle the more it will be worth when sold. At Whiskey & Wealth Club, we are excited to offer our clients the opportunity to invest and are pleased to help them capitalise on the unique opportunity 2020 has presented.