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Sunday, April 9, 2017

Luxury whisky – investing in whisky offers significant payoffs

It’s no secret that luxury whisky is now being purchased for more than just collection and consumption. Believe it or not, whisky is a form of investment that can render significant returns. In the UK, for example, specialized websites and auction houses are becoming core markets for buying and selling fine whisky bottles – the rarest the bottle, the better the chances to witness outstanding ROIs. 
Experts argue that in 2016 the value and volume of fine Scotch whisky sold in auction houses increased tremendously. A collection of Single Malt Scotch in the UK was trade for an astounding sum of £14.21 million, increasing 49% from £9.5 million. In 2015, the number of whisky bottles sold at auction houses increased by 35% - from 43,000+ to 58,000+. 

How to know the difference between investment whisky and standard whisky

To begin with, it’s worth mentioning that a bottle of whisky stored somewhere on a cupboard shelf is unlikely to increase in value anytime soon. Just because you don’t want to open it, it doesn’t mean at some point its value will increase. Bottles from special editions and rare whisky varieties have the best chances of rendering returns on investment. 
In countries like the UK, particularly in Scotland, more than 10,000 people work in the whisky and scotch industries. The drink has increased in popularity outside the UK, expanding to the US, Japan and China. Drinkers are not the sole beneficiaries of this boom. Collectors should be the happiest as whisky maker Glenlivet recently brought out a very rare type of whisky – the Winchester Collection 1964.

Distilled in oak barrels back in the 60s, the whisky was just bottled. The entire collection of 100 bottles can now be purchased for £18,000. Phil Huckle, ambassador of the Glenlivet brand, argues that the price can be perfectly justified. The company has been investing a lot in storing and making the whisky; after 50 years it was about time for the product to see returns. 

Is investing in whisky worth considering? 

£18,000 for a single bottle of whisky is a lot, since you can’t even drink it. Nonetheless, avid investors and collectors have seen substantial returns from investing in fine whisky in the recent years. Experts argue that the value of the world’s top 100 collectible whisky bottles has increased by an astounding 20%. However, even though certain brands are currently seeing sensible returns, let’s not forget that we’re talking about a form of investment; it’s risky to invest when you don’t know the market, meaning that cautious investors with not a lot of money to spare are advised to steer clear of this type of asset. What’s even worse is that there’s no investor protection in case something bad happens. 

What makes a bottle of whisky become a collectible? 

Just like with other similar forms of investment, scarcity, reputation, and uniqueness are fundamental. Experts would advise investors to begin with whiskies that come from authorized specialists; then they can move on to more exclusive varieties and explore the best most renowned distilleries. However, you should be very careful as forgeries are everywhere. 
In case you’re having doubts, the best thing that you can do is consult an accredited distillery. They’ll be more than happy to offer you information about the type of whisky you’d be interested to buy for investing. Another great idea might be to invest in whiskies you’re fond of, and then refine your palette step by step (as you gain more experience). If you’re just looking to collect, it’s best to purchase varieties you can actually afford. 
Regardless, investing in whisky is a subjective form of investment. A sensible return is not guaranteed, no matter what types you choose to buy. Stick with single casks, limited editions and discounted bottles to keep your investment as diversified as possible. As you gain more experience, you could consider outsourcing the selection process. Invest in a fund and let someone else choose the bottle varieties in your name. 
Bottom line is, before spending any money it’s best to get more familiar with the whisky business. Keep in mind that fine wine varieties such as Margaux wine, and others, are completely different from whiskies. Keep things simple spending wisely and you have high chances of seeing visible returns.